USD/CNH has dropped after U.S............>

CHINA YUAN: USD/CNH has dropped after U.S. President Trump said that he feels

that China talks will be successful. The rate last sits at CNH6.9010, ~110 pips

lower, after round tripping from a fresh YTD high of CNH6.9194.

- The PBOC is exp. to set its yuan mid-point at CNH6.8564, according to RTRS.

- The rate rallied 673 pips yesterday, as Sino-U.S. trade conflict continued to

intensify. Weekend news flow suggesting a major stalemate in bilateral trade

negotiations lent support from the off, before China announced that it is

planning to impose retaliatory tariffs on U.S. goods from June 1, while China's

Global Times noted that that "China may stop purchasing US agricultural products

and energy, reduce Boeing orders and restrict US service trade with China.

- Bulls need a close above the aforementioned fresh YTD peak to uphold the

topside momentum. Above CNH6.9194 would open up CNH6.9248, which capped gains

last December. Meanwhile, bears look fo pullback below the upper 1.0% 10-DMA

envelope, which comes in at CNH6.8777.

- A batch of Chinese economic data, including industrial output, retail sales

and unemployment, comes out tomorrow.