China Joins the Party

In a move that surprised practically no one, China decided to join the currency debasement party in order to stimulate its slumping economy.  E-minis are currently off 18 points, but the interesting action, of course, is in the currencies.

The Yuan made a big move, to be sure, but it affected different pairs to different extents.  Whereas the move versus the dollar was huge…

Screen Shot 2015-08-11 at 6.23.58 AM …it barely registered on the yen.  The reason, of course, is that the Japanese cannot afford to let anyone – especially China – beat them in the race to the bottom.  This actually tracks from a fundamental standpoint, as China is Japan’s biggest import partner.

Screen Shot 2015-08-11 at 6.24.51 AMThe USDJPY, predictably, is up.

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