Whilst it sounds far-fetched there is talk of a possible Yuan revaluation over the weekend. Traders give the rumour little credence although an FT article late Tuesday suggested China and the US might be close to an agreement on targets in terms of trade imbalances. Some other deals might have been done behind closed door perhaps based on the Fed going easy on QE at next weeks meeting.
A string of weak Yuan fixes this week has also resulted in a lot of speculative positions being cut and as we all know China does not like specs making money on their currency.
The upshot of a Yuan revaluation of lets say 3-5% would be initial US Dollar weakness across the board before manifesting itself in mostly Asia ex Japan currencies and perhaps the Aussie (proxy China play). Euro and Yen strength should not endure.
