The yuan is underperforming the region...>

CHINA YUAN: The yuan is underperforming the region today with USDCNH trading at

6.9352 currently, having failed to break below its 50-dma. A break above

Friday's high at 6.9453 would return the near-term focus to the upside. 

- EURCNH has extended gains after bouncing off its 200-dma last week, but the

broader downtrend from the late-Sep highs remains intact for now. 

- The yuan is weakening despite equities holding up and US yields remaining near

Friday's lows, suggesting expectations of looser monetary policy rather than

renewed fears over US-China trade relations are driving the pair higher. 

- China's Banking and Insurance regulator re-emphasized China's prudent monetary

policy stance earlier today but traders are increasingly seeing further easing,

with a RRR cut possible before year end. 

- While US-China rate spreads have narrowed from recent highs, this in part

reflects falling US inflation expectations as well as the impact of rising US

corporate credit spreads; two factors which tend to be dollar positive.