AUD and NZD have the highest sensitivity and R2s to the offshore yuan. The yuan tumbled below support and is down more than 500p on the day, last at 7.277
In the G10FX, the Aussie bottoms peers as it drops by almost 0.9% on the day, and the kiwi follows. In line with the matrix below, the Canadian dollar underperforms on the day, however, it declines to a lesser extent
Market sources noted hedge funds interest in short-term upside USD/CNH structures. Separately, sources reported Chinese banks selling dollars past 7.22 CNHs
Desks have warned that the move could spread negative sentiment to other markets and added that it is likely the PBoC has to step up FX support in the short-term
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