【英文】麦格理报告：全球外汇展望：美元峰值Global FX Outlook: Peak USD Topping out（45P）

英文研究报告 2019年12月11日 07:37 管理员

We cut USDCNY forecast to 6.95 by year end and 6.80 by 1H 2020, bringing forward the RMB gains we had expected through 2020 to the next 6 months. Despite the uncertainty near term on timing of Phase 1 deal, we think incentives for US and China to strike an agreement to support their economies are high. A trade truce combined with a rebound in global growth and a step up in China stimulus we forecast in the next one to two quarters suggests to us that RMB gains will likely be front-loaded in 1H 2020. • Our base case is for Phase-1 deal to be signed before December 15 to enable the cancelation of the December 15 tariffs. If it comes with additional tariff rollback, it would be an upside versus our forecast. Importantly, we think this trade truce will be more durable than the previous two (Dec 2018 and Jun 2019), with the US Elections acting as a circuit breaker to prevent talks breakdown and tariff re-escalation in 2020. • PBoC’s endorsement of RMB strength could lead the market to price for an implicit agreement for FX gains in trade deal. We don’t expect a deal to include RMB pledge at a specific target or range. However, the PBoC will likely encourage RMB strength post deal via lower USDCNY fixes. The UST may follow through to remove China’s currency manipulator designation. This should be enough to encourage the market to believe in an implicit agreement for RMB strength may have been struck. • China’s policy stimulus should gear up. While timing remains difficult to call, indication may come from the December Work Conference, where policy makers set their growth and key economic targets for 2020. We think achieving growth around 6% in 2020 will require a step up in stimulus. • A gradual moderation in the USD at a broad level should help add to USDCNY downside. We expect a gentle global growth rebound, with receding Brexit and US-China trade war risks also working to lessen the USD’s safe-haven appeal.

A currency agreement forms the basis for yuan stability, and quite likely strength in 1H 2020 We envisage a Phase 1 deal will include a currency chapter – similar to the USMCA agreement – with the following strengthened commitments: • Maintain RMB stable around an equilibrium level • Foster a market-determined exchange rate regime; refrain from competitive devaluation, including through intervention in the foreign exchange market; • Possibly commitment to further liberalize the capital account • Disclose data on FX intervention on a regular basis, likely within 90 days. Conform to other IMF requirement on FX reserves and forward disclosure, participation in IMF COFER report (which China already largely implemented). • Agree to an enforcement and monitoring mechanism which include regular office-level and ministerial-level meetings, between the PBoC and US Treasury to monitor FX policy. What a currency agreement between the US and China is unlikely to include is an explicit pledge for RMB at a specific target or range, and/or commitment to pursue intervention policies to achieve such targets (a Plaza Accord like arrangement). We explained in our Asia FX Strategy: CNY currency clause - from USMCA to Plaza Accord why such an agreement is not feasible, and its success highly questionable in today’s world. One key issue is publishing outright FX target/range would lead to speculation and more costly intervention. Even the Plaza or Lourve Accords did not release FX targets to the public. Another issue is from the PBoC’s perspective, agreeing to commit to certain RMB target would essentially mean giving up its FX and potentially monetary policy autonomy – a hard sell to its domestic audience. Intervention also has less chance of success absence greater coordination in underlying economic policy by both US and China.