Focus will continue to fall on the USD/CNY....>

CHINA: Focus will continue to fall on the USD/CNY fix. IIF's Robin Brooks noted

that Tuesday's "RMB fix was 3 standard devs too strong i.e. fixing the yuan

stronger than exp. That's got nothing to do with the "counter-cyclical factor"

or anything like that. This is China's policy makers switching to "manual" and

keeping the RMB strong. Last time this happened was ahead of G20 in June."

- Elsewhere on Tuesday, BBG sources suggested that senior PBoC off'ls reassured

foreign companies that the currency won't continue to weaken significantly at a

meeting with a number of foreign exporters in Beijing on Tuesday.

- Our own insight pieces have suggested:

- 1) The next round of China-U.S. talks may not now take place & have little

chance of success as the prospects for a deal any time soon fade, per former

Chinese off'ls.

- 2) China could sell U.S. Treasuries to hit back against Washington in trade

talks, a former senior Chinese diplomat told MNI, although a former deputy

commerce minister warned that Beijing would prefer to hold such a countermeasure

in reserve due to the possible negative effects on its own economy.