CNH adding to gains in recent trade,.......>

CHINA FX: CNH adding to gains in recent trade, helping press USD/CNH to the

lowest levels of the week, prompting CNY bulls to set sights on last week's lows

at 6.8701. Latest wave of CNH buying seems to follow confirmation of the dates

when US Treasury Secretary Mnuchin and trade negotiator Lighthizer will be

visiting the country to advance trade talks.

-USD/CNY vol markets hold close to recent cycle lows, with the 1m contract

within range of 3.1 points, the lowest level since H2 2017. The same is seen

across the term structure, with the largest falls over the past week in the

longer end, with tenors from three years and out dropping substantially.

-The move in vols follow a sharp improvement in options market sentiment toward

CNY over the past 2 weeks, with the prospect of USD/CNY rising north of 7.00 now

a distant thought. Medium-term risk reversals had the worst single session of

the year last week, and the 1m contract holds near the most tepid levels since

early May.