There are few straight-forward trades on China devaluation
My take is that the market is confused today. Every one I talk to today is signing the same kind of tune. It sounds like "One the one hand... but on the other"
One the one hand, it's bad for the Australian dollar because China suddenly doesn't have as much wealth to invest abroad because it's currency is softer. On the other, China is signaling that it's stimulating its economy. But on the other, maybe China is showing that it's panicking about growth. But on the mysterious-fourth-hand, where do the capital outflows go?
It's the same in almost any asset class (except Treasuries, it's good for Treasuries)
What happens when you end up in that kind of imbroglio is that everyone heads to the sidelines or safe havens, and that's what's happening today.
