Shakes Off Initial Strength, Bubbling Trade Tensions Weighed Against Strong PMI Data

USD/CNH extended losses as China posted better than expected official PMI data, but bottomed out shortly after the release and recoiled, eventually trimming earlier losses. The rate has respected the prior trading day's range thus far and last sits at CNH6.5770, a touch higher on the day.

• The manufacturing index improved more than expected to 52.1, suggesting that the expansion in the sector accelerated to the fastest pace in three years.
• The new week has brought a further escalation in China's conflict with Australia. Australian Trade Min Birmingham noted that Canberra is ready to sue China to the WTO over its duties on Australian barley, while PM Morrison demanded apology over a doctored image tweeted by China's Ministry of Foreign Affairs, depicting an Australian soldier holding a knife to the throat of an Afghan child.
• Per RTRS, the Trump administration is set to blacklist chipmaker SMIC, oil-and-gas explorer CNOOC and two other Chinese firms due to their military ties.
• Elsewhere, regulatory off'ls speaking with BBG said that "the chances that Jack Ma's And Group Co. will be able to revive its massive stock listing next year are looking increasingly slim."
• A break above Nov 24 high of CNH6.5971 would please bulls, opening Nov 12 high of CNH6.6349. Conversely, losses past Nov 18 low of CNH6.5321 would shift focus to the round figure/trendline support at CNH6.5000/6.4962.
• Caixin PMIs are due later this week, with the m'fing gauge due Tuesday & the services gauge due Thursday.