Trading around the yuan's managed float: what do you watch?
The PBOC sets a daily midpoint for the yuan and lets it trade within a band, intervening when needed. Trading USD/CNH or the commodity pairs off China requires reading the fix and the intervention signals.
How do you approach it?
- the fix and the signals you track
- which instruments you use to express China views
- the managed-float surprise that caught you
The commodity currencies guide covers the China-AUD channel.
Background: Commodity currencies explained: the Australian, New Zealand and Canadian dollars and the Norwegian krone
Why the currencies of big commodity exporters move with iron ore, dairy and oil prices, what each country actually exports, and when the link weakens.
What are commodity currencies?
Currencies of countries where commodity exports are a large share of trade, such as the Australian dollar (iron ore), the New Zealand dollar (dairy), the Canadian dollar (oil) and the Norwegian krone (oil and gas).
Why does the Australian dollar follow China?
Iron ore is Australia's largest export and much of it is sold to China, so Chinese demand and data affect Australia's export income and its currency.
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