PBoC Fix Adds Fresh Fuel To Yuan Appreciation

A slightly stronger than expected PBoC fix (CNY6.7825 vs. BBG est. of CNY6.7850) knocked spot USD/CNH on its head, prompting the rate to erase gains and slide into negative territory. China's central bank lowered the fixing rate by the most in five months, signalling comfort with the yuan's recent appreciation. USD/CNH last trades -84 pips at CNH6.7720 after topping out at CNH6.7861 earlier in the session.

• The WTO issued a ruling that the U.S. breached international rules by slapping punitive tariffs on China over alleged intellectual property rights violations, but the decision is not expected to have any material effect, given that the U.S. is effectively blocking the WTO's appellate system.
• Elsewhere, the Global Times lauded the choice of "cooperation over differences" by China and the EU, after their bilateral video summit held on Monday.
• Xinhua ran comments from Premier Li, who told business leaders that "China is set to achieve its main annual targets and register positive GDP growth in 2020".
• Initial support is located at Sep 15 low of CNH6.7661, the worst level since May 2019. Further losses past CNH6.7511 (May 3, 2019 high) would allow the rate to close a gap opened on May 4, 2019, which would turn bearish attention to the lower 3.0% Bollinger band at CNH6.7318. Bulls need to reclaim Sep 9 high of CNH6.8610 to regain poise.