USD/CNH remains on course to break above...>

CHINA FX: USD/CNH remains on course to break above the 50-dma at 6.7412, with a

bout of USD strength largely driving the move (CNH sits mixed against most other

G10). USD/CNY opened slightly weaker against the official close and remained on

the backfoot throughout the day. Some focus was paid to reports citing Song

Xuetao, head of research at Tianfeng Securities, who stated monetary policy will

remain loose in Q2 and the PBOC may lower RRR by 50bps in April.

-While other EMFX vols have generally edged higher this week, USD/CNY vols have

remained more muted, still well within range of the recent multi-month lows

printed down at 3.8425 in mid-March. News on progress made between Chinese and

US trade negotiators has been thin despite talks resuming this week, but further

signs of amicable progress made between the EU and China on the belt and road

initiative is helping ease sentiment (today, Luxembourg signed an accord with

China).

-Focus turns to further bank earnings after China Construction Bank missed

expectations today (inline with the broader fall in industrial profits seen at

the end of Q4).