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USD/CNH slides to weakest level since January 2023

BBH points to China August CPI rising at 0.8% year over year, but with subdued inflation versus PPI and limited pricing power, as the yuan’s support for consumption-led growth.

Reported · Written up by our desk · Major Pairs

Brown Brothers Harriman’s Elias Haddad says USD/CNH is drifting lower and has reached its weakest level since January 2023.

The view is tied to China’s August inflation data, where headline CPI rose modestly, while overall inflation remains subdued.

Haddad noted that headline CPI matched consensus at 0.8% year over year versus 0.5% in July, and that both core CPI and PPI came in above expectations at 1.0% year over year and 3.8% year over year, respectively.

With CPI lagging PPI and firms constrained in pricing power, BBH argues continued yuan appreciation could help shift growth toward consumption by boosting disposable income through cheaper imports, keeping the USD/CNH downtrend intact.

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