# USD/CNY catch-up may have more to go - MUFG - Forex Crunch

> MUFG said the USD/CNY decline on Friday was the largest daily drop since March 2018, and it expects further catch-up as Chinese markets return from a week-long holiday. The decline was driven by optimism over a US fiscal stimulus deal and rising expectations of a Biden election victory. MUFG warned that the stimulus outlook carries disappointment risk.

- Date: 2020-10-09 · published 2020-10-09T12:00:00.000Z
- Category: macro · region China · magnitude low
- Page: https://feedsoft.ai/events/5560-usd-cny-catch-up-may-have-more-to-go-mufg-forex-crunch
- Commodities: [US Dollar (Broad)](https://feedsoft.ai/c/DXY.md), [Chinese Yuan (CNY per USD)](https://feedsoft.ai/c/USDCNY.md)

## Why it matters

A weaker dollar and stronger yuan support Chinese import demand and dollar-priced commodities. The effect on feed prices is modest and depends on whether stimulus materializes.

## Read by commodity

- DXY: bearish ▼
- USDCNY: bearish ▼

## Linked price moves

| Commodity | Date | Window | Change % | z-score | Why linked |
| --- | --- | --- | --- | --- | --- |
| USDCNY | 2020-10-09 | 1 | -1.4% | -6.2 | MUFG attributes the largest daily USD/CNY drop since March 2018 to catch-up after the Chinese holiday, US stimulus optimism and Biden election expectations, directly explaining the move. |

## Similar past events

| Commodity | Date | Event | 5-day % | 20-day % |
| --- | --- | --- | --- | --- |
| DXY | 2020-08-28 | [USD: Fed has set up the dollar for further weakness - MUFG - Forex Crunch](https://feedsoft.ai/events/51792-usd-fed-has-set-up-the-dollar-for-further-weakness-mufg-forex-crunch.md) | -0.5% | +1.0% |
| DXY | 2020-02-28 | [EUR/USD: Central banks to favor the euro - Forex Crunch](https://feedsoft.ai/events/54804-eur-usd-central-banks-to-favor-the-euro-forex-crunch.md) | -0.5% | +4.3% |
| DXY | 2017-01-31 | [Trump Trouble: USD/JPY remains on the back foot - Forex Crunch](https://feedsoft.ai/events/73229-trump-trouble-usd-jpy-remains-on-the-back-foot-forex-crunch.md) | -0.6% | -0.6% |
| DXY | 2020-08-31 | [GBP/USD: Target at 1.3500 by October, unchanged -  CitiBank - Forex Crunch](https://feedsoft.ai/events/51864-gbp-usd-target-at-1-3500-by-october-unchanged-citibank-forex-crunch.md) | +0.1% | +1.4% |
| DXY | 2019-12-31 | [USD/JPY hits 19-day low despite steepening of US yield curve - Forex Crunch](https://feedsoft.ai/events/55795-usd-jpy-hits-19-day-low-despite-steepening-of-us-yield-curve-forex-crunch.md) | +0.2% | +0.6% |
| USDCNY | 2021-01-05 | [USD/CNY to tick down in the year ahead - MUFG - Forex Crunch](https://feedsoft.ai/events/12072-usd-cny-to-tick-down-in-the-year-ahead-mufg-forex-crunch.md) | +0.3% | +0.0% |
| USDCNY | 2020-08-26 | [USD/CNY: Yield advantage to strengthen the yuan - HSBC - Forex Crunch](https://feedsoft.ai/events/51836-usd-cny-yield-advantage-to-strengthen-the-yuan-hsbc-forex-crunch.md) | -1.2% | -1.5% |
| USDCNY | 2019-02-22 | [CNY: Tail risk of a competitive devaluation to be reduced? - ING - Forex Crunch](https://feedsoft.ai/events/60809-cny-tail-risk-of-a-competitive-devaluation-to-be-reduced-ing-forex-crunch.md) | -0.4% | -0.4% |

## Sources

- forexcrunch.com: https://www.forexcrunch.com/blog/2020/10/09/usd-cny-catch-up-may-have-more-to-go-mufg/

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Data from Feedsoft AI (https://feedsoft.ai/). For information only; not investment advice.