USD/CNY in the past week is "clearly a trial balloon" – Societe Generale

Analysts at Societe Generale offer their thoughts on the recent Yuan weakness and next direction in the coming days.

Key Quotes:

“USD/CNY in the past week is "clearly a trial balloon" (in response to trade threats). 

Too much depreciation could be counterproductive.

And also counterproductive to China's internationalization objectives - attracting foreign equity/bond capital.

Highlight the risk here, though, in 2015-16, a consolidation phase ensued following upward moves in the range of 3.5%-5%.”