Reflecting the marked uptick in CNH........>

CHINA FX: Reflecting the marked uptick in CNH yesterday (on the back of the

Trump-Xi meeting confirmation), the PBoC knocked the mid-point USD/CNY reference

rate lower to 6.8893 from 6.8942 the prior day. The helped nudge USD/CNH lower

still during Asia-Pacific hours, with the pair bottoming out 6.8930, the first

time below 6.90 since late May.

-Since then, markets have stabilised somewhat, with traders sitting on their

hands ahead of the FOMC rate decision, but this hasn't deterred USD/CNY options

traders, with total volumes today edging ahead of recent averages. USD/CNY calls

were in demand from the off, with 6.95, 7.00 and 7.30 strikes in focus.

-Of note, the PBoC confirmed the timing of their offshore bill sale overnight,

and are to sell CNY30bln of 6m and 1m bills in Hong Kong, a move which may

further support CNY via draining onshore liquidity.

-Markets also focused on reports in Economic Information Daily, suggesting that

the PBOC is unlikely to cut benchmark interest rates in the near term, noting

that a marginal and targeted easing is a higher possibility than a comprehensive

easing.