China: Deteriorating data could be problematic for CNY - TDS
Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities, points out that the Chinese data continues to decelerate rapidly, and they do not expect a near term change in this dynamic as global and EM growth continues to come under pressure.
“This may increasingly generate pressure and expectation for an aggressive shift in the monetary and fiscal policy reaction functions, which could be problematic for CNY.”
“This is not our base case and we expect that while the policy response is shifting more proactively, it will remain nuanced and targeted.”
“Acknowledging the negative impact of the recently re-priced Fed outlook and government shutdown on the USD, we have also revised our USDCNY forecast lower, but see near term upside risks from here.”