FxWirePro: Yuan weakens to lowest since August; further weakness towards 6.66 per dollar likely

As the September Fed meeting approaches, Chinese yuan has weakened to the lowest level in more than two weeks. Chinese yuan is currently trading at 6.588 per dollar, which is the lowest reading since August 30th. Weakness in the Chinese economic numbers released over the past two weeks contributed to the decline of the yuan along with profit booking at the key level of 6.46 per dollar.

Chinese trade balance was weaker than expected at $41.99 billion for August as exports rose by 5.5 percent, while imports rose by 13.3 percent in dollar terms. Both industrial production (6 percent y/y) and retail sales (10.1 percent y/y) were weaker than expected in August. Urban investment growth at 7.8 percent y/y in August was the lowest for the year. House price index growth was also lower than expected at 8.3 percent.

We at FxWirePro, expect the current weakness in the yuan to continue and the currency to weaken towards 6.66 per dollar.