CNY: growth stabilizing

Industrial production growth edged up and retail sales growth improved slightly in May on better car and fuel sales. Fixed asset investment growth improved, helped by small rebounds in real estate and manufacturing FAI growth. 

High frequency data remained mixed in early June. We expect GDP growth to moderate to 6.9% in 2Q from 7.0% in 1Q due to a slow sequential growth pick-up and a higher comparison base last year. 

A more notable sequential recovery is possible in 3Q as policy easing in past months works through the economy, preventing a further decline in year-over-year growth. Forecasts: most CNY depreciation

The upcoming Strategic and Economic Dialogue could provide an opportunity for the market to observe how the US would vote for the RMB inclusion in the Special Drawing Rights this year. 

"In FX, modest CNY depreciation against the USD is expected and forecast USD/CNY 6.33 by the end of this year", says Bank of America.