Australian dollar to follow yuan lower?

Monday 22 August 2016

A big drop in the yuan fix from the PBOC today may be suggesting further yuan devaluation is imminent:

There’s been a pretty decent correlation in recent years between periods of a falling yuan and periods of a falling Australian dollar:

Makes sense given our number one iron ore and coal competitor is actually China and the yuan tends to fall when the Chinese economy is weak.

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.