As mentioned many times over the past month or so, the continued run lower in the yuan is also another factor providing a tailwind for the dollar to run higher in the process. The PBOC yuan fixing today is another signal that China is letting the currency slide further as they also seek to re-introduce the counter-cyclical factor into the fixing mechanism.
The onshore yuan has weakened considerably in the past few weeks and the move today takes it past the 2019 and 2020 lows (highs for USD/CNY). The currency is now trading to its weakest since the global financial crisis.
At this stage, there isn't much of a benchmark to really pin where USD/CNY is headed to. It is pretty much going to go as much as China will want/allow it to go. But for the time being, all other factors are also working in the dollar's favour and that is a tough tide to fight against.
Broader markets are clinging on to the buy the dollar, sell everything else sentiment at the moment and with major economic and policy worries growing elsewhere in the likes of Europe and the UK, the lack of alternatives is only solidifying the greenback's position as king. Not to mention with the threats of a global recession and financial dislocations presented by the bond market.
