Decent bounce in CNH hedging volumes.......>

CHINA FX: Decent bounce in CNH hedging volumes early Monday as spot remains on

the backfoot after the re-emergence of US-China sabre rattling. Regional

equities held up well in China, with the CSI300 and Shanghai Composite both

finishing higher, but the CNH and CNY both still hold last week's weakness.

- USD/CNY hedging volumes are around double their usual levels for this time of

day and short-end implied volatility is holding the entirety of the gains seen

on Friday with 1m vols now holding north of 5 points to narrow the gap on the

Coronavirus rout high of 6.2 points.

- The larger and more interesting trades overnight are mostly upside protection

plays, with trades consistent with a very large 7.25/7.75 5-month call spread

crossing in Asia-Pacific hours. The options buyer paid a premium of near $4mln

for the position. The trade breaks even on a rise through ~7.30 in USD/CNY.