USD/CNH last trades at CNH6.7260, ~40....>

CHINA YUAN: USD/CNH last trades at CNH6.7260, ~40 pips higher on the day, on the

back of a modest softening in the CNY fixing, which was in line with market exp.

Xinhua reported that China's Liu spoke with U.S.'s Lighthizer and Mnuchin via a

phone call, with both sides making "substantial progress on the wording" of

their trade deal. These headlines provided little in the way of support for CNH.

- The rate added ~210 pips yesterday, as a combination of modest disappointments

in Chinese activity data and a moderation in enthusiasm re: Sino-U.S. trade

talks weighed on the yuan. The activity data broadly fell in line with exp., but

industrial output & unemployment missed forecasts. Elsewhere, in the European

morning the press reported that U.S. President Trump and his Chinese counterpart

Xi will not be meeting this month, which sent USD/CNH to intraday highs of

CNH6.7353. The news was later confirmed by U.S. Tsy Sec Mnuchin, with China said

to be pressing for making Xi's trip to the U.S. an off'l state visit.

- Yesterday's close above the 21-DMA leaves bulls targeting the CNH6.7326-6.7374

area. Bears need a move back below the 21-DMA to open up CNH6.7000.

- China house price data is due shortly, with Premier Li set to close the NPC.