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China's central bank revived the countercyclical factor in calculating the yuan's daily midpoint to support the currency. The yuan jumped more than 300 pips offshore to about 6.87 per dollar after the announcement, having lost nearly 8% since mid-March amid trade tensions with the US.
A firmer yuan reduces the price advantage of US exports to China and can ease Chinese buying pressure on US soybeans and feed ingredients. The policy move signals state intervention against depreciation driven by tariff disputes.
caixinglobal.comPeng Qinqin, Leng ChengAug 25, 2018After 50 past bearish policy events, Chinese Yuan (CNY per USD) moved a median -0.1% over 5 sessions (46% higher; middle half -0.4% to +0.4%), and -0.0% over 20.
After 369 past bearish policy events, Soybeans moved a median -0.2% over 5 sessions (46% higher; middle half -1.7% to +1.8%), and +0.8% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
Describes the same countercyclical factor revival and the 300+ pip offshore yuan jump to about 6.87, directly explaining the one-day drop in CNY per USD, though it is dated a day after the move.
