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…
…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.
The USDJPY, predictably, is up.
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