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A softer than expected PBoC fix did......>

CHINA YUAN
CHINA YUAN: A softer than expected PBoC fix did little to limit the Monday
sell-off in USD/CNH. Selling pressure hit the rate as China and the U.S. are
poised to finally ink their phase-one deal this week. A BBG headline
anticipating that U.S. Tsy might remove China from its list of currency
manipulators helped USD/CNH extend losses and register new multi-month lows (Fox
News reported it earlier, provoking a muted market reaction).
- U.S. Tsy's semi-annual FX report was released in the U.S./Asia crossover and
indeed stated that as a result of bilateral engagement "China should no longer
be designated as a currency manipulator."
- Little follow through seen so far after BBG ran a headline from CSJ re:
experts expecting China to cut RRR in Q2.
- Chinese trade balance will be in focus today. The local monthly activity
indicators & Q4 GDP are due to follow on Friday.
- USD/CNH sits at CNH6.8805, 19 pips worse off. Bears look for a dip through the
Jul 11 low of CNH6.8613, which would bring the Jul 1 low of CNH6.8168 into view.
Bulls would be pleased by a recovery of the CNH6.9000 mark.

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