Yuan Pressure Against Dollar, But Rises Against CFETS Basket

The Chinese Yuan presented an interesting paradox in today’s market action. Onshore Yuan sank below 7.3 mark against US Dollar, registering a 14-month low. This decline has intensified speculation that the People’s Bank of China might be adopting a more lenient stance toward currency depreciation. Such a move could be part of broader efforts to bolster economic growth amid mounting headwinds. The downward bias has been further fueled by the possibility of a renewed “Trade War 2.0” under the incoming US administration.

Conversely, the CFETS RMB Index—a measure of the Yuan’s trade-weighted performance against a basket of currencies—surged to its highest level since October 2022. Although primarily driven by the relative weakness of major currencies versus the Dollar, this uptick hints at potential challenges for China’s export competitiveness to other key markets.

These moves also coincide with CFETS basket weighting adjustments for 2025, including reductions in the weightings of Dollar (from 19.46% to 18.903%), Euro (from 18.08% to 17.902%), and Yen (from 8.963% to 8.584%).

The larger question remains: How far is China willing to let Yuan depreciate? This is a mounting question given the uncertainty surrounding any trade measures the US might impose after Donald Trump’s January 20 inauguration. Beijing’s true intentions would become clearer after that.

Technically, it does look like that USD/CNH (Dollar vs offshore Yuan) is ready to resume it’s long term up trend from 6.3057 (2022 low). Decisive break of 7.3745 (2022 high) will pave the way to 100% projection of 6.6971 to 7.3673 from 6.9709 at 7.6411.

Related Posts

© Reuters

Forex flows were light into payrolls data, BofA says, highlights positions at risk By Investing.com

Có thể bạn quan tâm Dax Forecast Today 16/12: Builds Pressure (Video) Forex Focus | tastylive FX week in review: Tyson Fury and PSG get CFD broker…

Forex Markets React to Speculation on Trump’s Economic Policies

Forex Markets React to Speculation on Trump’s Economic Policies

Có thể bạn quan tâm Mitrade, Australia’s Award-Winning CFD Trading Platform, Elevates Trader Protection in an Expanding Crypto & Forex Market Can PBoC tweak tame the rising…

EUR/AUD taps out, Wall Street could throw the ASX a lifeline (for now)

EUR/AUD taps out, Wall Street could throw the ASX a lifeline (for now)

Có thể bạn quan tâm USD/JPY Forecast Today 20/12: Breaks Key Levels (chart) AUD/USD Forecast: RBA Rate Cut Odds Up After Easing CPI S&P500 Price Nears 5,868;…

Dollar softens slightly amid gradual tariff pledge

Dollar softens slightly amid gradual tariff pledge

Có thể bạn quan tâm Exclusive: LCG loss ballooned to £6M in 2023 following move to Introducer model China Cracks Down On Crypto By Tightening Forex Rules…

GBP/USD Forex Signal Today 14/01: Bullish Rebound (graph)

GBP/USD Forex Signal Today 14/01: Bullish Rebound (Chart)

Có thể bạn quan tâm Gives Up Early Gains (Video) GBP/USD Price Analysis: Upbeat Jobs Data Boosts Sterling EUR/USD Signal Today – 23/12: Double-Bottom Rebound (Chart) Canadian…

GBP/USD Price Analysis: Sterling Steady Ahead of US Inflation

GBP/USD Price Analysis: Sterling Steady Ahead of US Inflation

Có thể bạn quan tâm AUD/USD Signal Today – 19/12: 2-Year Low Drop (Chart) USD/CAD Forecast Today 10/1: Friday’s Critical Moves (Video) Another Truss Moment? – Action…

Leave a Reply

Your email address will not be published. Required fields are marked *