🔻 Yuan Weakness Could Drag High-Beta FX Lower: Cable FX Macro

• We have seen the offshore yuan hit the lowest levels since the currency was introduced back in 2010, next level on our radar is 7.40 (perhaps inspired by several desks' calls)

• This morning's UBS Strategy flow data pointed to USD/CNH buying from hedge funds, they said this had supported the move higher in the dollar-yuan rate

• Last night, we saw the PBoC fixing weaker, this breaks the trend of lower USD/CNH daily fixings by the central bank. It goes to show that the yuan is being let go by authorities, some analysts point that this adds upward pressure to dollar-yuan

• I always tell "It's not G10FX, it is G11," as some market followers, less experienced traders often leave the yuan out of the picture. However, the euro is sensible to CNH moves, high-beta FX is positively correlated to the yuan, and if it were to test higher levels, this could easily pressure growth currencies