A stronger solution here today is not too encouraging, as USD/CNY continues to rise throughout the day. The pair is now trading just below 7.33 as it continues to battle for a potential breakout to start the year.
USD/CNY weekly chart
The yuan story hasn’t changed much since the latter stages of last year. This move is just a case of Beijing wanting to finally draw lines in the sand when it comes to the exchange rate. And that’s as they prepare for the inevitable trade war against the US when Trump takes office.
But as USD/CNY climbs to new highs, it will inadvertently add an indirect tailwind for the dollar in general. This is especially so in relation to emerging market currencies, especially in Asia. So, take care of it.