USDCNH has edged higher in early.........>

CHINA YUAN: USDCNH has edged higher in early trading, breaking above the 6.94

level as bulls continue to focus on Friday's high at 6.9453 to resume the

uptrend. 

- EURCNH has broken above down trendline resistance from the September highs,

with the Nov 7 high at 7.9524 now in focus as the yuan resumes its real

effective decline. 

- Yuan weakness vs the dollar is coming despite equity outperformance vs the US,

marking a slight change in recent price action. 

- While US-China yield spreads have moved in the yuan's favour over the past few

days as US yields have dropped faster, US financial conditions are tightening as

corporate credit spreads rise. Rising US corporate spreads are putting upside

pressure on Chinese CDS spreads, which are trading at range highs. A break

higher would likely take USDCNH with it based on historical correlations.