USD/CNH in Focus as Westpac Warns China Needs Proactive Policy in 2026

USD/CNH remains a key pair to watch as Westpac analysts highlight that China must pivot toward more proactive fiscal and monetary policy in 2026 to sustain economic growth. Despite US tariff pressures, Chinese exporters successfully redirected goods to alternative markets across Asia, Europe, and Latin America, expanding trade surpluses in those regions and more than offsetting lost US demand. The rapid expansion of Chinese-owned production facilities abroad has strengthened global integration, creating durable revenue streams for firms and the state. However, domestically the outlook is more mixed, suggesting that internal demand and consumption remain areas of concern. The People's Bank of China may need to deliver additional stimulus measures, which could weigh on the yuan. For traders, the divergence between resilient external trade performance and sluggish domestic activity creates a nuanced picture for CNH-related pairs. AUD/USD and NZD/USD also face indirect exposure given Australia's and New Zealand's trade dependence on Chinese demand. Traders should monitor upcoming Chinese PMI data and any policy signals from Beijing for directional cues.