After PBoC's trade-weighted view of CNY during a last weekend, the warning shot from PBoC for the 'FX Wars', we don't think Fed has taken this into account very seriously.

PBoC's operational documents were recently released attributing the weakness in China's exports to the strengthening of the CNY's real effective exchange rate (REER).

On a year-to date basis, China's exports has contracted by 2.6% y/y as compared to a 5.6% gain over the same period last year. To substantiate its conclusion, we noted that its external demand index has held steady since the middle of 2014, while export growth had turned negative.

The recent increased appetite by the PBoC to allow CNY depreciation, widening in CNH-CNY basis and greater focus on CNY real effective exchange rate performance has encouraged our higher USDCNH view, and we continued to recommend being long USDCNH in forwards.

Recent gains in USDCNH endorse the overall bullish view of our technical strategists who looks for an upside extension towards initial targets near the 6.5945, 2015 highs. A move beyond there would point higher towards 6.6630, the November 2010 high.