The yuan continues to mount a recovery...>

CHINA YUAN: The yuan continues to mount a recovery against the dollar with

USDCNH trading at 6.6336 currently, down 1.5% from its intraday high on July 3. 

- The yuan's recovery is being supported by broad-based dollar weakness, which

has meant the yuan continues to underperform most major EM and DM currencies,

with the yuan's trade-weighted index edging lower. The greenback's broad-based

weakness is positive for further S-T yuan gains.

- EURCNH is clinging to 7.80 after having taken out its 200DMA last week. The

pair is threatening to break out of downtrend resistance from the August 2017

high. 

- CNHJPY is showing some ST reversal potential in line with most other yen

crosses, with a break above 16.70 (from 16.65 currently) likely to provide the

impetus for more sustained CNH gains.

- CNHKRW trades at 167.44, at the lower end of its 6-month range. The 30-day

rolling correlation between USDKRW and USDCNH has risen to as high as 0.9 as the

yuan's influence on regional FX increases, and so we would not expect any major

moves in the CNHKRW cross.