Upbeat commentary about yesterday's......>

CHINA YUAN: Upbeat commentary about yesterday's stellar performance from Chinese

stocks in the local press helped drag USD/CNH lower this morning, which resulted

in a brief penetration of the key CNH7.0 level. The round figure gave way for

the first time since March, but a stronger than expected PBoC fix pushed USD/CNH

back above there. The rate sits at CNH7.0096 at typing, 35 pips worse off.

- China's tensions with a number of other nations over the Hong Kong situation

continue to simmer, but there is little in the way of breaking news to report on

that front.

- Yesterday's breach of the 200-DMA & Jun 10 low generated downside momentum,

which put the rate on course to attach the CNH7.0 mark today. A clean break of

that figure would open up Mar 16 low of CNH6.9849, followed by Mar 9 low of

CNH6.9049, an important support level. Bulls look for a rebound above Jun 10

low/200-DMA at CNH7.0401/26, which would expose the 100-DMA at CNH7.0742.

- Looking ahead, focus turns to Chinese inflation data, due Thursday.