USD/CNH Retreats, Sino-U.S. Tensions Remain In Focus

USD/CNH has been offered, despite continued escalation of Sino-U.S.
diplomatic tensions over the weekend. Broad-based greenback sales have
dragged the spot lower, as participants look for fresh signals on the
Sino-U.S. spat. A softer than expected PBoC fix inspired a muted initial
reaction and the rate briefly showed under the CNH7.0 mark, before ticking
off lows. USD/CNH sits -144 pips at CNH7.0029.

• Weekend news flow has centred around Sino-U.S. tit-for-tat consulate
  closures. China protested the "forced entry" by U.S. officials to its
  Houston diplomatic site, which occurred just after the deadline for
  Chinese personnel's exit from the building.
• China's industrial profits jumped 11.5% Y/Y in June.
• Bears need a fall through Jul 22 low of CNH6.9643 before taking aim at
  Mar 9 low of CNH6.9049. Bulls look for a rebound above Jul 24 high/200-DMA
  at CNH7.0302/49.
• Focus moves to China's official PMI readings, due Friday.