USD/CNH on fire, en-route to 6.60

FXStreet (Bali) - Despite the relatively stable fix by the PBOC earlier today, setting USD/CNY mid-point at 6.5616 vs 6.5743 last close, USD/CNH continues to edge higher, currently breaking above 6.59, with new high at 6.5973.

If we were to witness further Yuan offshore depreciation today, that will most likely be perceived as a negative input for risk assets, keeping present risk aversion conditions on. It is worth noting that the levels in RMB-based Hong Kong interbank lending rate have come dramatically off record highs, after the chaotic rises seen earlier in the week, potentially prompting players to resume CNH shorts.