The Opening Belle - 21st October 2020

 PBoC Fixes USDCNY Reference Rate At 6.6781 (prev fix 6.6930 prev close 6.6770)— LiveSquawk (@LiveSquawk) October 21, 2020 

The yuan climbed to its strongest level since July 2018, presenting China’s central bank with another test of how much appreciation it will tolerate.

“The PBOC will take this week’s yuan strengthening as too fast,” said Nathan Chow, a senior economist at DBS Bank Ltd.’s Hong Kong branch. “It will send signals verbally or through the fixing rate. They could ask Chinese banks to buy U.S. dollars.”

Traders are pricing in bigger swings by the yuan before the poll on Nov. 3.

The offshore yuan’s one-month implied volatility has climbed to 7.3%, near the highest level since March.

The Chinese economy will probably continue expanding at a roughly 5% annual clip over the next 15 years, an adviser to President Xi Jinping told Nikkei, citing a rapidly developing technology sector.

The comment comes ahead of a plenary session starting Monday for the ruling Chinese Communist Party's Central Committee, which will discuss long-term economic goals through 2035. Hu Angang, a professor in Tsinghua University's School of Public Policy and Management, said that "China has been able to control the coronavirus' impact on the economy, but many uncertainties remain in the world."

"If we take advantage of our massive domestic market, there is room for the Chinese economy to develop further," Hu said.

"China's high-tech capabilities are advancing rapidly, and it has become the world's largest exporter of high-tech products," the professor said. "China's high-tech exports have increased by an average of 7.1% a year from 2007 to 2018," he said.

The Central Committee will also discuss the five-year plan for 2021 to 2025 at the upcoming meeting. Although it announced a numerical growth target as part of its previous plan through 2020, Hu said it is "still too early to set a target" for the next five years.

"The target can be set at the next National People's Congress, which starts in March 2021," he said -- suggesting that the next five-year target can be announced at the same time as the annual goal usually unveiled at the gathering.

Some in the Communist Party have also suggested delaying the announcement of a five-year target, likely hoping to wait for the outcome of the U.S. presidential election.

Interest is also high in how Xi's new economic strategy of "dual circulation" -- refocusing on domestic reliance while taking advantage of trade and foreign investment -- will be incorporated into the next five-year plan. The strategy is seen as a response to China's growing tensions with such Western nations as the U.S. and their impact on Chinese business.

Critics see China as essentially isolating itself and ending economic reform with dual circulation. In response, Hu said the strategy "should not close off the Chinese economy, but rather develop both internal and external circulation together."

"The idea is not only to reshape circulation within China, but also to renew the strengths of the circulation between China and the rest of the world," he said. China may be looking to incorporate friendly nations and advanced economies into its supply chains.

Post elections day stress easing and at lowest levels in a while.

VIX Nov vs Oct futs spread.

 FRA/OIS spread.

No funding issues in dollar markets.

Looks like bearish dollar for a while yet, bullish risk (including BTC obviously) pic.twitter.com/xGE8GryWwn— David Belle (@davidbelle_) October 20, 2020 

 On several open questions, the Speaker and the Secretary called for the committee chairs to work to resolve differences about funding levels and language. With this guidance, the two principals will continue their discussions tomorrow afternoon upon the Secretary's return. (3/3)— Drew Hammill (@Drew_Hammill) October 20, 2020 

AstraZeneca Plc's COVID-19 vaccine trial in the United States is expected to resume as early as this week after the U.S. Food and Drug Administration completed its review of a serious illness in a study participant, four sources told Reuters.

AstraZeneca’s large, late-stage U.S. trial has been on hold since Sept. 6, after a participant in the company’s UK trial fell ill with what was suspected to be a rare spinal inflammatory disorder called transverse myelitis.

The sources, who were briefed on the matter but asked to remain anonymous, said they have been told the trial could resume later this week. It was unclear how the FDA would characterize the illness, they said.

UK regulatory officials previously reviewed the illness and determined there was “insufficient evidence to say for certain” that it was or was not related to the vaccine. It permitted the trial to resume in the UK, according to a draft of the updated consent form shared with Reuters.

“In this case, after considering the information, the independent reviewers and MHRA (Medicines and Healthcare products Regulatory Agency) recommended that vaccinations should continue,” the draft consent form stated. “Close monitoring of the affected individual and other participants will be continued.”

Regulators in Brazil, India and South Africa also previously allowed AstraZeneca to resume its vaccine trials there.

Transverse myelitis, which the study volunteer is believed to have developed, typically occurs at a rate of 1-in-200,000 people, Offit said, so it would be unusual to see it in a trial of 9,000 individuals.