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The People's Bank of China is working to contain a weakening yuan after the currency fell by the most since March. The slide follows Fed forecasts pointing to earlier U.S. interest rate increases, which strengthened the dollar.
A weaker yuan lowers the dollar cost of Chinese purchases of feed grains and meal, which can slow import demand and soften U.S. feed commodity prices at the margin.
bloomberg.comTian ChenJun 17, 2021After 398 past bullish macro events, Chinese Yuan (CNY per USD) moved a median +0.0% over 5 sessions (56% higher; middle half -0.3% to +0.5%), and +0.0% over 20.
After 2,356 past bullish macro events, US Dollar (Broad) moved a median +0.2% over 5 sessions (60% higher; middle half -0.3% to +0.7%), and +0.4% 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.
Reports of the yuan's biggest fall since March after the Fed's earlier-hike signals confirm a dollar-strength driver and PBOC efforts to contain the depreciation.
The yuan fell the most since March on Fed tightening expectations, and PBOC efforts to contain the slide confirm the dollar-driven depreciation pressure.
