USDCNH failed to extend its drop below...>

CHINA YUAN: USDCNH failed to extend its drop below 6.9700, with the pair

recovering to 6.9740, returning the focus to its daily high of 6.9788, above

which would target the key 7.0 level. 

- Chinese authorities are working on further measures to boost lending from

banks and insurers to private companies according to the CBRC's comments

yesterday, showing that policy is becoming increasingly dovish at a time when

the yuan is under intense weakening pressure. A recovery in stocks will be

needed to prevent further easing from trigger further USDCNH upside. 

- Despite yuan weakness, EURCNH and GBPCNH look to be breaking lower, with the

former testing the 7.90 level, below which a bearish reversal would look likely.

GBPCNH has already broken below support at 8.90, suggesting further weakness.