China exports and imports fall, RRR cut – TD Securities

Analysts at TD Securities (TDS) offer their afterthoughts on the recent Chinese Trade Balance and RRR cut by the Chinese central bank.

Key Quotes:

“China’s August trade data was weak, with exports and imports falling, reflecting the worsening impact of tariffs and slowing growth.

The trade outlook is likely to deteriorate further, with the latest intensification of tariffs having yet to be felt.

In response to weaker activity and to push lending to smaller firms the PBoC cut its RRR. We expect further cuts to come but the impact continues to be muted.

We think CNY depreciation remains the most obvious avenue to easier financial conditions.

We maintain our view that CNY remains an obvious avenue for an easing in monetary conditions.

The RRR cuts taken together with weak trade data are likely to mean that any retracement in USDCNY will be limited and short-lived.”