Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
CNY has depreciated 5.3 percent against the US dollar to be the worst performing Asian currency year to date. Broad based USD strength is seen as the key driver behind the CNY moves.
PBoC intervention in the FX market has been primarily to limit volatility, rather than defending any particular level. Throughout the period of USD strength, the daily yuan fixings have been following the fixing mechanism established in February this year. This is an indication that the authorities are not interfering with the fixings, and are accommodating the dollar strength.
With Trump’s surprise election victory, the PBOC’s monetary policy becomes trickier, and harder to keep neutral. Trump's protectionist policies along with strong fiscal support raise possibilities for earlier than expected Fed hikes adding further depreciation pressure on the Yuan.
China is already grappling with signs of higher inflation. Inflation data released earlier this week showed China's October consumer inflation rate rose to 2.1 percent from a year earlier, while producer prices rose a better-than-expected 1.2 percent, the highest since December 2011.
The People's Bank of China (PBoC) has held its main rates at record lows for more than a year to support growth. In its quarterly report published on Tuesday, the PBOC said it will maintain a prudent monetary policy, and take steps to prevent asset bubbles in an increasingly leveraged economy. It said that China's CPI growth may be around 2 percent this year.
At around 1230 GMT, FxWirePro's Hourly USD Strength Index stood at 112.449 (highly bullish). For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
