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Citi FX's Initial Take on This Week's China Fragility:

CHINA
  • With market participants on edge for the FOMC tomorrow, they believe that lighter positioning may be exacerbating price action.
  • USDCNH had proved to be relatively resilient until this morning, and Citi think the push through 6.50 was exacerbated by stops.
  • Citi wait to see if there's a daily close above the 6.50 level but if there's a technical break confirmed, then it may be a slow grind higher to 6.58 which marks the highs from April. For now, 6.52 seems to be capping the topside move.

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