Report Industry Investment Rating - Not provided in the content Core Viewpoints - The volatility of the USD/CNY exchange rate will intensify in the short term due to trade policy uncertainties. In the medium term, with the Fed's policy shift and the narrowing of the interest rate spread, the RMB has a chance to stabilize periodically [55]. - The Trump administration's "reciprocal tariffs" policy will push up the price level in the US, increasing the short - term upward pressure on inflation. The US economy will face a more severe "stagflation" risk, and the narrative of recession or stagflation may continue [25]. Summary by Directory Quantity - Price and Policy Signals Quantity - Price Observation - The implied volatility curve of the 3 - month USD/CNY option shows an appreciation trend of the US dollar, with the call - end volatility significantly higher than the put - end, and the volatility rising significantly. The market's expectation of the future volatility of the USD/CNY exchange rate has increased [5]. - The term structure data of the Singapore Exchange's USD/CNY futures and bank forward premiums and discounts, as well as the US - China interest rate spread, are presented, but specific trends are not clearly summarized in the text [8][10][11]. Policy Observation - The policy counter - cyclical factor has been activated, but the overall willingness to stabilize the exchange rate is lower than in the previous round. The policy counter - cyclical factor shows a continuous upward trend, and the US - China interest rate spread shows an upward trend. The three - month CNH HIBOR - SHIBOR spread has narrowed [16]. Fundamentals and Views Macro - The Fed is expected to cut interest rates by 95bp by 2025, and the pricing of US interest rate cuts continues to rise. Short - term interest rates are rising, the TGA account balance was 301.6 billion on April 2, and the Fed's reverse repurchase balance was 233.4 billion US dollars [20]. - The US economy has a rising downside risk. Employment data is mixed, with the February non - farm payrolls falling short of expectations and the unemployment rate rising; inflation is rebounding; the economy maintains resilience, with retail sales and fiscal spending falling, the manufacturing industry falling in March, and the service industry rebounding [22]. Events - On April 2, Trump's "reciprocal tariffs" policy was implemented, including a 10% "benchmark tariff" on all countries and personalized higher "reciprocal tariffs" on countries with large trade deficits with the US. The tariff scale considers value - added tax, trade deficits, "exchange - rate manipulation, and non - tariff barriers". There are exempted goods and countries, and the policy contains a "modification right" [24][25]. - Many countries have taken counter - measures against the US tariffs, including condemnation, negotiation, and counter - tariffs [26]. - The "reciprocal tariffs" policy is beyond market expectations. From the perspective of tariff rate comparison, most of the top 15 trading partners of the US in 2024 had higher most - favored - nation tariff rates than the US in 2022. From the perspective of trade surplus, countries/regions such as China, the EU, Mexico, and Vietnam have large trade surpluses with the US [27]. - The US may further increase tariffs on China. A review of the previous round of Trump's tariff increases shows that the RMB and A - shares were under pressure, and the RMB depreciated by about 8% at most during the three - round tariff increases. Among commodities, iron ore and non - ferrous metals were most directly affected [33]. 3 - Month Data - The US non - farm payrolls in March exceeded expectations, with consumption - related industries (retail), trade, and the government contributing to the increase. The hourly wage in March increased by 0.25% month - on - month and 3.6% year - on - year, which may intensify long - term inflation. The impact of the March non - farm payrolls was small, and the market was dominated by tariff concerns in the short term [37]. - In March, the US "rush to export" ended. The US manufacturing PMI was 49.8 (52.7), the service industry PMI was 54.3 (51), and the composite PMI was 53.5 (51.6). The service industry offset the decline in manufacturing. In Europe, the manufacturing PMI was 48.7 (47.6), the service industry PMI was 50.4 (50.6), and the composite PMI was 50.4 (50.2) [38]. - China's economic structure is differentiated. From January to February, industrial production, infrastructure investment, and manufacturing investment maintained high growth rates, while consumption and real - estate investment improved month - on - month, and the decline in real - estate sales narrowed significantly. Import and export growth rates declined, and the credit structure did not improve significantly. The economic sentiment rebounded in March [41]. - In March, China's PMI improved month - on - month but was weaker than the seasonal average year - on - year. Production increased less than new orders. The "rush to export" continued in March, imports decreased by 2% month - on - month, and finished - product inventories decreased. The industry sentiment was transmitted from upstream to downstream [43]. Overall View - The current situation shows a neutral economic expectation gap between China and the US, a neutral Sino - US interest rate spread, and trade policy uncertainties that are favorable to the US dollar. In the short term, the USD/CNY exchange rate will fluctuate more due to trade policy uncertainties. In the medium term, the RMB may stabilize periodically [55]. Risk Assessment - The range of the basis fluctuation of the futures main contract from April 2022 to the present (nearly 3 years) is between - 1100 and 900 [56].