CNY losses are likely on Monday after the CPI data from China at -0.5% Yr/Yr versus -0.2% expected.
Speculation will grow that a medium-term facility rate cut could be seen Dec 15 by the PBOC. However, core inflation was +0.6% Yr/Yr, which will likely make the PBOC less willing to react with a rate cut. Also we would stilll feel that a further 25bps RRR cut is more likely in December or January, as the next monetary eaasing step. Initial CNY losses could thus slow into mid week.
