Softer Than Exp. PBoC Fix Fails To Stop USD/Yuan On Its Way To Fresh Cycle Lows

Spot USD/CNH but popped higher in reaction to a softer than exp. PBoC fix (CNY6.6781 vs. BBG est. of CNY6.6745) and promptly resumed its slide, after earlier printing worst levels since Jul 2018 in early Asia-Pac trade. Greenback weakness liked to relative optimism surrounding U.S. fiscal talks helps render the pair heavy and it last changes hands -75 pips at CNH6.6555, slightly off lows.

• Spot USD/CNY gapped lower as onshore trading re-opened, tracking losses in USD/CNH and falling to the lowest level since Jul 2018. It last deals -110 pips at CNY6.6657.
• While setting the central USD/CNY mid-point higher than forecast could signal that the PBoC is watching the redback's appreciation with some sense of concern, the limited impact today's fixing had on price action draws even more attention to how policymakers will behave, going forward.
• U.S. new Special Coordinator for Tibetan Issues Destro met with Tibet's president-in-exile Sangay, drawing harsh criticism from Beijing and pouring fuel on simmering Sino-U.S. tensions.
• From a technical perspective, bears need USD/CNH to slide through channel floor at CNH6.6410 before targeting the round figure/lower 3.0% Bollinger band at CNH6.6000/6.5861. Conversely, a jump above Oct 13 high of CNH6.7653 is needed to bring bears some reprieve and bring channel top at CNH6.7831 into play.
• Little left on the Chinese economic docket this week.