###POV: WEAKER CNY MAY BECOME STATUS.....>

CHINA YUAN: ###POV: WEAKER CNY MAY BECOME STATUS QUO, BUT RECENT MOVE RUNNING

OUT OF STEAM

-Both markets and policy makers may be signalling that the recent run-up in

USD/CNY & USD/CNH is coming to an end. While the PBoC's weaker fixes have

alleviated some trade concerns, MNI's exclusive with a China adviser today

suggested Cny 6.70 may be a line in the sand for the PBoC, at which point the

central bank "may step in".

-Both onshore and offshore Yuan have dropped against the USD for ten straight

sessions, the longest losing streak since March 2014. Options markets have

embraced recent weakness, with 3m risk reversals touching the highest level

since February as the entire front-end of the riskies curve shifts higher.

Despite this, options markets are less bullish on USD/CNY now than they were in

early 2018, when a new round of CNY devaluation was reportedly considered by

Chinese authorities. Furthermore, the spot price now sits well above the

majority of option strikes due over the next 2 weeks - potentially suggesting

traders see the recent rally petering out in the near-term.