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Onshore yuan (CNY) has dropped to its weakest since mid-November 2023

The US dollar has been supported against the yuan by interest rate differentials, US Treasury yields have firmed again since the very strong jobs data (NFP headline +272K) at the end of last week.

The People’s Bank of China set the onshore yuan reference rate at its weakest since January 19 today:

PBOC sets USD/ CNY reference rate for today at 7.1135 (vs. estimate at 7.2724)

As mentioned in that reference rate link, spot yuan is allowed to trade in a 2% range on either side of the daily midpoint. By raising the mid-point the PBOC allowed USD/CNY to trade higher (ie CNY weaker) in the spot market. The topside limit for today is 7.1135*1.02 = 7.25577. Its since traded close to there and to the weakest for CNY since November 16 2023.

The weak yuan is weighing on AUD, circa 0.6594 and almost on its session lows as I update.

This article was written by Eamonn Sheridan at www.forexlive.com.

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