The SQL precompiler reads the source records by using the CCSID of the source file.
When processing SQL INCLUDE statements, the include source is converted to the CCSID of the original source file if necessary. If the include source cannot be converted to the CCSID of the original source file, an error occurs.
The SQL precompiler processes SQL statements using the source CCSID. This affects variant characters the most. For example, the not sign (¬) is located at 'BA'X in CCSID 500. This means that if the CCSID of your source file is 500, SQL expects the not sign (¬) to be located at 'BA'X.
If the source file CCSID is 65535, SQL processes variant characters as if they had a CCSID of 37. This means that SQL looks for the not sign (¬) at '5F'X.