TD Securities strategists expect Chinese authorities to keep USD\/CNY volatility low through the 2026 Two Sessions. They do not expect resistance to Chinese yuan strength during this period.<\/p>\n
The strategists forecast USD\/CNY will drift down to 6.7 by the end of 2026, in line with broader US dollar weakness. They also note the pair could reach 6.7 by mid-2026 if the current pace continues.<\/p>\n
After the Two Sessions end on 11 March, they expect possible changes to structural foreign exchange settings. These measures would aim to slow further yuan gains and limit uneven moves in the exchange rate.<\/p>\n
Authorities are likely to keep volatility in the USD\/CNY pair to a minimum during China’s most important political event of the year. We believe the People’s Bank of China is not fighting against appreciation and would allow a gradual decline in the exchange rate. The forecast suggests a move toward 6.7 by the end of the year, tracking broad weakness in the US Dollar.<\/p>\n
This view is supported by recent data showing China’s exports grew a solid 5.2% year-on-year in January, beating expectations. This fundamental strength gives officials confidence in allowing the currency to rise. We are seeing the PBoC consistently setting the daily reference rate stronger than market estimates, signaling their comfort with the current trend.<\/p>\n
On the other side of the pair, the US Dollar is under pressure following a softer-than-expected Core PCE inflation report last month. The data showed a mere 0.2% increase, fueling market bets that the Federal Reserve may consider easing policy later this year. We remember how the dollar index fell sharply throughout much of 2025 as the global economic recovery broadened.<\/p>\n
For the next two weeks, until the Two Sessions conclude on March 11, low volatility is the most likely scenario. This suggests that selling option volatility, such as through short straddles or strangles, could be a prudent strategy to collect premium. The pair is currently trading around 6.82, and we expect it to be kept in a tight range.<\/p>\n
Looking beyond mid-March, positioning for a further decline in USD\/CNY seems logical. Buying put options with expiries in the second quarter could capture the anticipated move toward the 6.7 level. The pace of appreciation has been quick, and it seems our year-end forecast could be reached by this summer.<\/p>\n
However, we must be cautious about potential policy tweaks after the political event. If the Yuan strengthens too quickly, authorities may adjust foreign exchange parameters to slow the gains. This could introduce a risk for those holding overly aggressive positions for a stronger Yuan post-March.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Strategists expect China to curb USD\/CNY volatility through 2026 Two Sessions, allowing yuan strength before reforms.<\/p>\n","protected":false},"author":62,"featured_media":16960,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43661","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=43661"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43661\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16960"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=43661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=43661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=43661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}