China FX/Rates Monitor: Measured Easing, Resilient CNY and Low Rates

Our monitor tracks the latest developments and identifies key indicators for China FX and rates, including valuations/policy stance, technicals, flows, and fundamentals. Pressure to meet the full-year growth target has prompted measured easing: domestic demand has continued to weaken, with retail sales growth slowing to 0.4% yoy in August and year-to-date fixed asset investment declining 7.2% yoy; our GDP nowcasting model tracks Q3 real GDP growth at 4.2% yoy, below our 4.4% forecast. Policymakers announced a new round of measured easing, including a 25bp PSL rate cut, RMB700bn in additional targeted relending quotas and mortgage interest subsidies;