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CHINA YUAN
CHINA YUAN: USD/CNH last trades at CNH6.9079, ~50 pips higher on the day, with a
stronger than exp. yuan fixing failing to drag the rate to negative territory.
- The PBoC announced that it will sell CNH30bn of bills in Hong Kong on June 26;
as we highlighted before, the Bank seemingly uses HK auctions to support CNH.
Importantly, the auction takes place just ahead of the key G20 summit.
- This comes after headlines stating that the U.S. and China will resume trade
talks ahead of an "extended meeting" between U.S. Pres Trump & Chinese Pres Xi
soothed the nerves of investors yesterday. USD/CNH sank ~280 pips as a result.
- Worth noting PBoC Dep Gov Chen said yesterday that the central bank will let
markets play a greater role in shaping yuan exchange rate.
- Bulls need to clear the CNH6.9176-94 area, which registered highs on May
13-15, before challenging the 21-DMA, located at CNH6.9263. Bears target the
psychological support at CNH6.9000 ahead of the 23.6% fibo retracement of the
YtD range at CNH6.8936. A further break here would open the May 14 low of
CNH6.8878.

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