On Monday (13:50 BST) Morgan Stanley.....>

CHINA YUAN: On Monday (13:50 BST) Morgan Stanley recommended selling USD/CNH at

market with a target of CNH6.6000 & a stop at CNH6.9200.

- Morgan Stanley reason that "after applying a 20% trading reserve requirement

to all onshore FX forward transactions on 3 August, the PBoC reintroduced the

counter cyclical factor last Friday. The timing of this introduction is

interesting, to us, as USD/CNY trades the same level as that on 3 August, which

suggests there is no urgency for the PBoC to introduce it now. Considering the

often-heard view that CNY reflects a policy stance of the Chinese government

with respect to trade negotiations, some could see this as an attempt by Chinese

authorities to prevent CNY depreciation while negotiators discuss a potential

trade agreement with the US. We don't necessarily agree that the CNY is being

used for this purpose, but the market could interpret it in this way and thus

take USDCNH lower. Either way, the reintroduction of the counter cyclical factor

does reduce downside risks to CNY, in our view. The risk to the trade is the US

maintains an escalatory stance with respect to trade negotiations, or the USD

appreciates due to hawkish Fed or selloff in risk."