📝Chinese Yuan Policy Support Lifted The Australian Dollar: Westpac

It is rare for the Chinese yuan to move the most among key Asian currencies over the week, given its movement is limited by the ranges set by the central bank each day. The Korean won, Indian rupee or Philippine peso are usually more lively. So the 1.2% jump in the Hong Kong-traded yuan (CNH) and 0.9% rally in the onshore yuan (CNY) was very notable, especially following the 16-year lows the week before.

The yuan’s rally was steepest last Monday (11 September), CNH up 0.85%. On the same day, AUD rose 0.86%. Of course, the correlation between the Aussie and the yuan is not always so tight, but the shift in stance by Chinese authorities clearly relieved some pressure from the Aussie.

Beyond the policy tweaks such as guiding the daily fixing midpoint and taking steps to discourage USD purchases, China printed some helpful data. August readings on new lending, industrial production and retail sales all beat consensus, though weren’t really game changers in terms of the overall momentum of the economy. - Westpac