Analysts at Goldman Sachs downgraded their outlook on the yuan, shifting from a more cautious stance to “an outright negative view”. The downgrade has raised the risk of capital flight in the same manner it did in August (during the mini-devaluation).
Further weakening of the yuan against the USD may lead to tighter financial condition (including lower US stock prices) and could dent the pace of U.S. rate hikes, Goldman analysts said in a research note.
Analysts at Bank of Tokyo Mitsubishi explained that the financial markets continue to anticipate the possibility of a second Fed rate increase taking place at either the June or July FOMC meetings, which until now has not resulted in any sharp deterioration in investor sentiment.
The material has been provided by InstaForex Company – www.instaforex.com