Weaker CNY close undermining.......>

EMERGING MARKETS: Weaker CNY close undermining trade optimism

-CNY found no reprieve Tuesday, keeping 7.20 in the picture and clocking the

weakest onshore close since 2008 for a second session. The move follows further

comments from the Chinese foreign ministry, who reiterated that they had not

heard of any such telephone call between the US and China - further

contradicting the US President's bullish comments earlier in the week. This

drained risk sentiment somewhat, pressuring the likes of KRW, TRY and ZAR.

-As expected, the INR opened higher and remains one of the better performing

EMFX currencies Tuesday following the confirmation yesterday of a multi-billion

dollar dividend being transferred from the RBI to central government. 71.50

looks the most likely target for INR bulls, but momentum looks to be lagging

slightly into the close

-The Hungarian central bank rate decision is expected unchanged today, with

benchmark rates seen being held at 0.90%. Mexican trade balance and unemployment

rate data is also on the docket.