The People’s Bank of China (PBOC) took its defense of the Chinese yuan to a whole new level today, fixing the USD/CNY midpoint more than 1,000 pips stronger than expectations at 7.2006. It was the strongest fix relative to expectations on record, continuing the recent trend of the PBOC counteracting market forces that threatened to push the yuan to fresh multi-decade lows against the US dollar.
The USD/CNH strengthened on the PBOC announcement, pushing lower to test 7.2860, the high hit of the previous cyclical peak struck in early July. With the yuan strengthening near-term, it’s helped to boost other Asian currencies such as the Japanese yen and Australian dollar against the US dollar.
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