The Bank of Canada move reverberated across markets Wednesday:

The rate hike from the BOC was a surprise, but just a should pout to Scotia for tipping it, as posted yesterday:

In the wake of the BoC hike US Treasuries lost ground

  • CAD strengthened immediately after the decision, but gave it back
  • AUD and NZD were two of the weakest majors after the announcement
  • US equities had opened with a rally, but these fell away after the BoC, NQ big-time

As for the yuan, it came under pressure after yesterday's trade data:

Chinese exports and imports both came in lower than April, a sign of weak global growth momentum and soft domestic demand. This sparked, once again, speculation of policy easing to come.

Yuan slid after the data:

but slumped further overnight in line with the losses described above. USD/CNH popped above up through 7.15 for the first time this year:

usdcnh Bank of Canada 08 June 2023

Keep an eye on the People's Bank of China CNY reference rate setting today. The Bank has been following along readily with the declining yuan but too sharp a pace of fall risks the PBOC striking back to stabilise the yuan, for a few days at least. The setting is at 0115 GMT (2115 US Eastern time).

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ps.

  • USD/CNY is the onshore yuan. Its permitted to trade plus or minus 2% from this daily reference rate.
  • CNH is the offshore yuan. USD /CNH has no restrictions on its trading range.
  • A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.