USDCNH has held support at 3.675, which....>

CHINA FX: USDCNH has held support at 3.675, which marked the top of the

January-April trading range and suggests that the pair has confirmed its move

into a higher trading range. Resistance comes in at the May 30 high of 6.433 and

the 200DMA at 6.456. A break of these levels would confirm a yuan bear market. 

- Today's weaker-than-expected trade figures out of China appear to have weighed

on the yuan, with the trade balance in May almost halving from a year ago.

Reserve figures released yesterday also showed a monthly drop and suggest

China's external balance sheet is much less solid than it once was.

- The divergence in monetary policy between the US and China is another factor

that may undermine the yuan. As MNI has been reporting over recent weeks,

various state mouthpieces have been making the case for a RRR cut even as the US

Fed maintains its hawkish stance, suggesting that the real interest rates are

likely to move in the US's favour.