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China's yuan rebounded after week-long holidays and rose 0.6 percent to 6.5838 per dollar. One-month implied volatility climbed to 5.78 percent, the highest since January.
The move followed central bank governor Zhou Xiaochuan's call for a more market-based FX mechanism.
A stronger yuan and higher volatility raise hedging costs and make Chinese import prices less predictable. The effect on feed commodity prices is modest.
bloomberg.comBloomberg NewsOct 10, 2017After 362 past bearish macro events, Chinese Yuan (CNY per USD) moved a median -0.1% over 5 sessions (42% higher; middle half -0.4% to +0.1%), and -0.2% 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.
Yuan rebounded sharply after the holidays following Zhou Xiaochuan's call for market-based FX and a strong fix, directly driving the large one-day CNY appreciation and higher volatility.
