Coronavirus Cases Creep Higher

Offshore yuan hugged a range on Monday, USD/CNH moved between 6.4600 and 6.4720 for the majority of the session last changing hands at 6.4673, up 23 pips. The pair is between its 50-DMA at 6.4473 and 100-DMA at 6.4718. After some large swings last week price action has settled back into a more familiar range, the brief foray above 6.50 last week was the first break since April while the rate still hasn't been below 6.45 since June. One-month CNH implied volatility is down some 11% from its peak last week, last at 4.165%.

• Coronavirus concerns are becoming more of an issue; there were 61 cases in the past 24 hours, up from 55 the day before. As a result of the steadily increasing numbers millions of people have been placed under lockdown in an attempt to contain its largest outbreak in months with mass testing and travel curbs. The delta variant has now spread to 20 cities.
• Following a broad slowdown in PMI data over the weekend and earlier this week, markets await the final instalment of the Caixin PMI survey, Caixin services PMI, on Wednesday.