Hole in Yuan
Despite Treasury's decision not to label China a currency manipulator - the Yuan has been collapsing...vs. the US Dollar.
The Peoples Bank of China has been considerably more careful about how its currency has moved relative to gold.
In Q1, the PBOC appeared to 'manage' its currency to 8,400 Yuan per oz of gold.
In Q2, the PBOC strengthened its 'peg' to 8,300 Yuan per oz of gold; and the last few months have seen gold managed stronger still at around 8,200 Yuan per oz... until this week...
As the chart above shows, it seems the PBOC has managed to 'peg' the Yuan back to only 8,500 per oz of gold.
This is a significant breakout (weaker) for the yuan...reinforces the need for the Chinese Central Bank to increase the global supply of yuan which will inevitably decrease the yuan vs. any other asset on earth.
Further weakness in CNY could then be seen as an escalation of the trade war between the US and China. At the same time, it would seem that CNY appears to be tracking gold closer than any other currency market.
This devaluation is consistent with the need for China to get their currency more in use around the world.
A process that is in its' early stages, we are certain to see these trends continue.