CHINA RATES: China Repo Rates Diverge on Wednesday

The better than expected retail sales print (+1.3% for July, versus +0.3% expected), has helped stabilize AUD/USD sentiment, but by and large, risk off flows continue to dominated. The pair was last at 0.6855/60, against earlier lows just under 0.6850. The DXY has broken to fresh cyclical highs above 109.30, which is helping drive broad based USD gains.

• Outside of equity market weakness, in the commodity space, copper and iron ore are down as well, with only oil holding up resiliently at this stage. Copper is off 1.8% to $363 (CMX), while iron ore is down nearly 3% to under $103/tonne.
• AU yields are seeing solid rises. the 2yr up by 10bps to over 3.03%, while the 10yr is to 3.66%. The AU-US 2yr spread though remains within recent ranges at -37bps.
• The retail sales print should give the RBA confidence the economy remains on a reasonable footing, but this isn't lending too much support to the FX today.

• MNI: AUSTRALIA JUL RETAIL SALES +1.3% M/M

The USD/CNY fix printed at 6.8698, versus a market estimate of 6.8794 (BBG survey).

• Today's fix is another strong downside surprise, in USD/CNY terms of -96pips. Since last Wednesday, we have now seen a cumulative -309pips in terms of downside surprises, so a heavy leaning against depreciation pressures.
• The firm market bias remains towards buying USD/CNH dips though. The pair touched above 6.9250 earlier, with the pair last at 6.9200, with the fixing having no lasting impact on sentiment so far.
• The focus may soon start to shift to other tools the authorities can utilize to stem yuan depreciation.