USD/CNH drops as Morgan Stanley lifts China 2025 GDP forecast to 4.5%

USD/CNH has declined 0.5% to 6.8320 after Morgan Stanley raised its forecast for China's 2025 GDP growth to 4.5%, up from the previous estimate of 4.2%. The more optimistic outlook comes as US-China trade tensions show signs of easing following recent high-level talks. China's manufacturing and services PMIs both exceeded expectations in May, coming in at 51.2 and 54.5, respectively. This suggests that the world's second-largest economy is regaining momentum despite ongoing global challenges. The positive data has boosted risk sentiment, driving demand for the Chinese yuan. USD/CNH now faces immediate support at 6.8200, with further downside potential toward 6.8000 if trade relations continue to improve. However, resistance at 6.8500 could cap gains if geopolitical uncertainties resurface.