The housing market was remained the biggest downside risk in Q1 but there are signs of stabilization now.PBoC is expected to ease further but it will not go all in. Managing financial risks still has high priority.China is not expected to join the global currency war by allowing its currency to depreciate markedly to support growth.China’s currency is expected to be included in the SDR this autumn but we do not expect a ‘big bang’ liberalization of the capital account ahead of the decision.It is projected that a moderate recovery in second half of this year supported by monetary and fiscal easing.We think this sturdy economic pull-back affects on Euro’s depreciation.On a medium term basis, shorting EUR/CNY futures is advised with a strict stop loss around 7.0532 levels for almost upto 500 pips.This futures position carries Risk/Reward Ratio of 0.39 (or 40%).
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