USD/CNH has rallied ~260 pips and last...>

CHINA YUAN: USD/CNH has rallied ~260 pips and last trades at CNH6.8710, as

markets have absorbed weekend news flow pointing to a notable lack of progress

in Sino-U.S. trade talks, with potential for further escalation in the trade

war. RTRS expects the PBOC to set its yuan mid-point at CNH6.8049 today.

- The rate finished 74 pips higher Friday, with participants looking for clarity

re: the future of Sino-U.S. trade negotiations.

- BBG reported that the U.S. now gives China a month to seal a trade deal, while

Chinese VP Liu told reporters that the main bones of contention are the removal

of all U.S. tariffs on China, setting targets for Chinese purchases in line with

actual demand, and properly balancing the text of the trade deal. Elsewhere, the

weekend saw a fresh round of hardline rhetoric from both sides.

- May has seen USD/CNH rally sharply towards the year's best levels. The initial

bullish target is provided by the Jan 3 YTD high of CNH6.8947. Conversely, a

retreat below the upper 1.0% 10-DMA envelope, which comes in at CNH6.8559, would

allow bears to set their sights on the 200-DMA at CNH6.8262, breached last week.

- Chinese industrial production and retail sales hit on Wednesday.