Key recent developments.    BRL: Industrial Production (Jun'17, MoM).Better than expected at 0.0%.    BRL: Trade Balance (July'17). In line with expectations at USD6298mn.    PEN: CPI (July'17, YoY). In line with expectations at 2.85%.    RMB: still expect depreciation but at a more gradual pace.    We revise our USDCNY forecast to 6.9 by end of this year, 7.1 in 2018, and 7.4in 2019. Before revision it was 7.1, 7.6 and 7.9 respectively. The revision for thisyear is due to the surprisingly weak US dollar against the other currencies, andthe upside risk in China’s growth outlook in H2. The revision for 2018 and 2019is mostly driven by our forecast revision for EURUSD, as our FX strategists havea more positive view on Euro than before.    We still expect a moderate but persistent depreciation against the PBoC basket,by 2.2%, 2.7% and 4.9% in 2017-19. The key driver of this depreciation pressureis the property bubble in China. The large wealth effect from the property bubblewill continue to push up domestic demand for imports. We therefore expect thecurrent account surplus to drop to 1.3% of GDP in 2017 and 1.1% in 2018 (1.8%in 2016), with risks on the down side. See our Macro Update on Chinafor details.    Brazil: COPOM minutes reinforce dovish stance.    In our opinion, the COPOM minutes reinforced the dovish message conveyedby the communiqué, signaling another 100bp cut for the next meeting inSeptember. The minutes repeated the benign inflation forecasts reported by thecommuniqué, and suggest the BCB downplayed the effect of recent increasesin regulated prices. Regarding the signal for the next meeting, the COPOMmembers concluded that they should signal "a possible easing of the samemagnitude as the one implemented at the current meeting, but it will depend onthe continuation of the conditions described by the COPOM’s base-case scenarioand on estimates of the total cycle extension.” Therefore, should macroeconomicconditions remain broadly unchanged, we believe that the most likely scenariofor the next meeting would be another 100bp rate cut. In light of the centralbank’s dovish bias, we now expect another 100bp rate cut at the next COPOMmeeting and we are revising our year-end SELIC rate forecast to 7.25% from8.00%. However, we are also raising our 2018 IPCA forecast to 4.4% from 4.2%.    Although we still do not expect changes in the SELIC rate in 2018, there is a higher risk that the BCB may have to reverse course next year, especially if political riskassociated with the presidential election increases asset price volatility and leadsto a weaker exchange rate. See Brazil Update for details.    Trouble no more: Take profit on RUB shorts.    We recommend taking profit on RUB shorts, initiated in late May (see forexample the FX Blueprint), as RUB is no longer expensive and long FX positioninghas lightened significantly. Further, the last two times USDRUB spiked tocurrent levels on geo-political/external risks, the move reversed relatively quickly.    Therefore, we view the current geo-political risk-related spike as providing a goodopportunity to exit our USDRUB longs.

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