VIEW: On Thursday TD wrote that "Chinese......>

CHINA: VIEW: On Thursday TD wrote that "Chinese data continues to decelerate

rapidly & we do not expect a near term change in this dynamic. This may

increasingly generate pressure &  exp. for an aggressive shift in the mon &

fiscal pol reaction functions, which could be problematic for CNY. This is not

our base case & we exp. that while the policy response is shifting more

proactively, it will remain nuanced & targeted. A much more aggressive Chinese

rates-based response remains possible however, but depends on the global macro

context & pivoting particularly on the Fed's stance & broad USD performance.

Trade negotiations with the U.S. will play a role, and the incentives for both

sides to come to an agreement, even if only superficial, are strengthening.

Acknowledging the -ve impact of the recently re-priced Fed outlook & government

shutdown on the USD, we have also revised our USDCNY forecast lower, but see

near term upside risks from here. We see USDCNY being pushed to 6.90 by end of

Q2, but then recover to 6.70 by end of '19 (vs. 7.00 prev), and 6.30 by end of

'20 (vs. 6.60 prev). We still believe that the topside remains a risk for USDCNY

in the near term, but dependent on the trade war resolution with the U.S."