The US dollar, even though the magnitude of its appreciation is somewhat limited today, is still coming close to breaking its longest weekly streak in nine years on a weekly basis, supported by a solid series of economic data from the US that puts the end of the Federal Reserve's aggressive interest rate hike cycle in doubt.
Investors and traders in this sphere are paying primary attention to the EURUSD pair, nevertheless in this case it is worth looking at the value of the world's reserve currency against the Chinese yuan. In the onshore market, the yuan ended today's session at its lowest since 2007, battling capital outflow pressures and a widening yield gap with the major economies. As for the currency's trading in the broad FX market, however, the USDCNH pair broke out to levels of 7.35 today, which border on the highest levels recorded since October 2022. The reason for such large yuan sell-offs on a daily basis was today's lowest fixing for the currency pair in two months.
The PBoC has found itself in a tough position, and simultaneously stabilising the exchange rate, preventing capital outflows and maintaining an independent monetary policy at the same time is proving very difficult, especially in the wake of a strong US dollar.
Source: xStation 5
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