It certainly looks as though we may get a replay of last night’s session which saw the yuan surge against the dollar after the PBoC made it clear they intend to take full advantage of the new “cyclical adjustment factor” when setting the daily fix.
The offshore yuan was drifting lower ahead of Thursday’s CNY fix prompting me to say the following:
Sure enough, just a half hour later:
The PBoC strengthened the daily reference rate by 0.79% to 6.8090 – that’s the highest (i.e. strongest) since November 10.
And the stage is thus set for the overnight session:
The onshore yuan is aiming for its largest four-day gain in a dozen years as the spot rose 0.25% to 6.8000 per dollar (and beyond) in early trading, extending its four-day gain to 1.3%, as of 9:49 a.m. in Shanghai. As Bloomberg notes, “that’s the most since July 2005, when China ended a peg to the dollar.”