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

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.