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According to analysts from TDS, last week interest rate cuts and the latest trade data from China suggests that any retracement in the USD/CNY will be limited and shortlived.  

Key Quotes:  

“We expect further RRR cuts in the months ahead consistent with easing across Asia. That said, the PBoC is likely to remain cautious towards a benchmark rate cut. In line with this, we remain focused on the CNY as the obvious avenue for China to ease its monetary conditions. The RRR cuts taken together with weak trade data are likely to mean that any retracement in USDCNY will be limited and shortlived.”

“We continue to expect further pressure on CNY even as the PBoC continues to control the pace of the move. We expect a move to USDCNY 7.30 by end 2019 and maintain our long USDCNH position in our model portfolio.

“We expect other Asian currencies to react to CNY depreciation as sensitivities to CNY gyrations have increased overall. Despite the weaker than expected exports outcome, markets will likely react favorably to the cut in RRR while continuing to pin their hopes on upcoming trade talks between the US and China in October.”