USD/CNH is trading heavy in early Tokyo, taking the exchange rate from a NY close of 6.5285 down towards 6.52 before a 50 pips bounce to stabilize circa 6.5250 ahead of the PBOC Tokyo fix. The initial first reaction in USD/CNY may suggest that risks of a higher USD/CNY fix by the PBOC are skewed in favour of a slight Yuan appreciation if the offshore Yuan price action is of any indication. Chatter in institutional circles has been on the rise that the PBOC might be open, once again, to a more flexible FX regime. Last week, we reported an article by Nomura, with analysts arguing that enough evidence has been given in recent fixes, especially after the first positive error in their proprietary USD/CNY fix model, to make them think that "a policy shift towards greater FX flexibility in the Chinese Yuan is possible." Nomura added that "the regime of consistent lower-than-projected fixes has changed." For more information, read our latest forex news.