Although the PBOC did deliver on a RRR cut, it disappointed market expectations for something more as the central bank did not add to stimulus measures earlier today here.
There are certain quarters in the market looking to the PBOC to cushion the blow to the Chinese economy with added stimulus, but it seems like they may be taking a different approach. They fixed the yuan weaker again today and we are seeing the offshore market take it above 6.40 against the dollar with little resistance it seems.
The latest push also breaks a key trendline resistance so that is something interesting to take note of, even if technicals aren't so much a factor for the yuan. That said, if China is indeed allowing its currency to weaken a fair bit more then it is a bit of a warning signal to emerging market and risk currencies. At the same time, it could act as another tailwind for the dollar in the short-term.
