China comfortable with being interventionist on yuan than in 2015

Russia ramps up yuan & gold share in its reserves

US markets are set to close early for the Fourth of July holiday. He also said that the yuan wouldn't be used as a weapon in a trade war with the U.S.

By the midday trading break on Monday, the blue chip CSI300 index.CSI300 was down 1.4 percent, while the Shanghai Composite Index.SSEC fell 1.1 percent.

Chinese currency and equity markets have been on edge ahead of Friday, when U.S. tariffs on US$34 billion (S$46.5 billion) worth of Chinese goods kick in.

To deepen market-oriented exchange rate reform.

The central bank put the midpoint roughly in line with market expectations at 6.6497 yuan per dollar, its weakest level in about 10 months, setting the stage for the day's drop.

The Hong Kong stock market on Tuesday wrote a finish to the two-day winning streak in which it had advanced nearly 600 points or 2.1 percent.

The dollar retreated 0.4 percent against a basket of currencies .DXY and the easing tensions in Germany helped the euro to gain 0.2 percent against the greenback EUR=D3 .

Authorities are also confident they won't have to make heavy use of the official foreign exchange reserves to defend the yuan as they did during 2015 when stocks and the currency went into a tailspin.

Also muddying trade relations between the world's two largest economies was a Chinese court ruling that temporarily barred USA chipmaker Micron Technology Inc from selling some of its main products in the world's biggest memory chip market.

"I detected increasing alarm over trade tensions and a lot of nervousness about a full blown trade war, which comes at a bad time for China where the economy is undergoing a downdraft at the same time the United States is seeing a sharp upturn", Aninda Mitra, Singapore-based senior sovereign analyst at BNY Mellon Investment Management, who visited Shanghai last week, said in an emailed note to media.

"The agreement between Chancellor Merkel and German interior minister Horst Seehofer should see German political risk fade into the background as a downside risk for the euro in the near-term", MUFG analysts told clients.

"The big driver behind USA resilience is that tech has been strong", said Rory McPherson, head of investment strategy at asset manager Psigma.

Other Asian currencies weakened, especially those such as the Indonesian rupiah that are doubly exposed - to trade and oil prices approaching $80 a barrel. Europe's tech and energy sectors rose 0.5 and 1 percent respectively.

China is Australia's major export market and its currency, the Australia dollar, is considered a liquid proxy for China-related risk.

Support: 6.6263 (session high), 6.6046 (previous day's low), 6.60 (psychological support).

The People's Bank of China has already signaled that it's on alert for excessive declines, by setting the yuan's reference rate on the strong side of what models had predicted last week, according to Morgan Stanley.

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