Danske Bank analysts note that although the Chinese PMIs fell back in April but are still clearly off the lows and they continue to look for a moderate economic recovery in 2019.

Leading indicators still point to improvement:

• Lower yields point to a lift to home sales. Construction is robust due to low inventories.

1. Commodity prices point to moderate recovery.
2. Credit impulse is improving.
3. PMI exports have rebounded.

• We look for a US-China deal in late May or early June to ease the trade war uncertainty further. We see a 50-50 chance of a further cut in the Reserve Requirement Ratio. We expect more targeted lending and stimulus towards consumer durables.
• We expect USD/CNY to grind lower towards 6.60 in 12 months on economic recovery and a trade deal.