VIEW: Goldman Sachs note that "since.....>

CHINA YUAN: VIEW: Goldman Sachs note that "since the US-China trade war kicked

off, forecasting CNY has partly been a call on politics. And until recently our

view has been that the risks of escalating disputes with the US ahead of the Nov

election outweighed China's favorable domestic econ backdrop. But both

considerations have arguably turned more +ve for CNY. First, financial markets

may increasingly look through a pickup in near-term noise around the bilateral

relationship, because polling data points to higher odds of turnover at the

White House next year, which could affect US foreign policy goals & tactics.

Second, China's domestic fundamentals look increasingly solid: growth remains

sturdy, the virus is reportedly under control, the trade surplus has expanded,

and both equity markets & interest rates are moving higher. As a result, we

think CNY will participate in broad USD weakness, and are revising our forecasts

stronger. Specifically, we are lowering our 3m USD/CNY target to CNY7.05 from

CNY7.25, implying some near-term depreciation in response to a likely pickup in

tensions with the US, but a smaller magnitude than we prev. expected. We are

also lowering our 12m USD/CNY forecast to CNY6.70 from CNY7.00."