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Danske Bank analysts suggest that for the Chinese economy, April PMIs fell back but are still clearly off the lows and they continue to look for a moderate recovery in 2019.

Key Quotes

“Leading indicators still point to improvement

  • Lower yields point to a lift to home sales. Construction is robust due to low inventories.
  • Commodity prices point to moderate recovery.
  • Credit impulse is improving.
  • PMI exports have rebounded.”

“We look for a US-China deal in late May or early June to ease the trade war uncertainty further. We see a 50-50 chance of a further cut in the Reserve Requirement Ratio. We expect more targeted lending and stimulus towards consumer durables.”

“We expect USD/CNY to grind lower towards 6.60 in 12 months on economic recovery and a trade deal.”