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CHINA YUAN: Thursday saw J.P.Morgan note that "the near-term outlook for CNY has
improved with strong equity inflows, which have been driven by a cyclical
rotation that reflects optimism around the ongoing Chinese economic recovery.
Risks are skewed toward further downside in USD/CNY from continued equity
inflows, offsetting flows from onshore dividend payouts recede towards the end
of month. Increased foreign buying of Chinese bonds in recent months add
support. Medium term, downside in USD/CNY is still bounded by uncertainty around
trade tensions as well as poor visibility around any sustained decline in the
USD. Tail risks around re-escalation in US-China tensions in the lead-up to the
US election could limit the room of any undershoot below the lower end of the
current tariff neutral range at CNY6.95-7.20. Additionally, pressure on USD/CNY
from any increase in exporters' USD conversion is much lower in '20 vs. '17. We
enter a long CNH vs. short equally wtd USD, EUR & AUD basket. China's growth,
int. rate & current a/c edge, as well more efficiency in taming the risks of a
second COVID outbreak means there is room for Chinese basket exceptionalism to
express itself, that has so far lagged the swift USD/CNY decline."