Yuan Tumbles As PBoC Gambit Puts The Brakes On – At Least For Today

I’m not sure it will ultimately be enough to get the job done, all things considered, but the PBoC’s decision to effectively remove a barrier to speculation against the yuan (that’s a crude way to describe it, but it gets the point across) by cutting a reserve requirement put in place in the days following the devaluation in 2015 seems to have succeeded in putting the brakes on the rally – if only for a day.

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‘The Clocks Stopped At 1:17’…

Ok, get ready.

For now, the fiscal-chaos-can has been kicked, Harvey is behind us, and North Korea’s latest nuclear test has come and gone.

But dead ahead is Irma’s landfall in Florida, North Korea’s “founding day” (which by most accounts will be “celebrated” with an ICBM launch), and of course, more gridlock in D.C. We are, figuratively and literally, in the eye of the storm on Friday.

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Yuan Heads For Best Week In More Than A Decade As China Trade Data Is Resilient

“The extremely bearish USD sentiment spilled over to the yuan market, and fixing failed to cool down bullish sentiment,” Ken Cheung, a senior currency strategist at Mizuho Bank in Hong Kong notes, adding that “heading to the weekend, risk-off sentiment due to the foundation day of North Korea also raised safe-haven demand for the yuan.”

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PBoC Strengthens Yuan Fix For 8th Day – Longest Streak Since 2015

We still maintain that it’s just a matter of time before one of these fixings comes in much, much weaker than expected. That’s not to say the medium-term trend won’t be a stronger yuan and it’s certainly not to suggest that the PBoC is eager to upset any apple carts ahead of the Party Congress next month. It’s just to say that if there’s anything the PBoC hates, it’s the idea that market participants think the currency is a one way trade. And this is becoming a one-way trade.

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Asian Shares Tumble, Gold Rises As North Korea Said Planning New Missile Launch

“Though considered a tail risk, a military confrontation on the Korean peninsula could see Asian currencies falling 5% to 10% and the region’s equities plunging 20%,” UBS Wealth Management Global CIO Mark Haefele and head of Asia Pacific investment Min Lan Tan write in a new note.

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