Goldman Sachs on the yuan - devaluation will do more harm than good

Passing on some comments on the CNY via GS

• we continue to recommend long JPY/KRW as a tactical hedge against fresh adverse headlines
• China cannot extend tariffs on US goods much further, but it has other options to retaliate, including CNY devaluation
• However, US 'trade wars' have tended to turn into 'currency wars' in which currency devaluation against the dollar is seen as provocative
• Premier Li's comments this week that "One-way devaluation will do more harm than good to China's economy. China will by no means stimulate exports by devaluing the yuan" suggest that, though policy makers are likely to continue a broad-based policy loosening to offset the effects of trade tensions, a sharp weakening of the CNY is less likely-for now-to be part of this mix.

Today's USD/CNY mid rate setting is due around 0116GMT