Early in the prior Asian session, a rumor circulated that the PBOC's intention was to depreciate the yuan by 10% to gain a competitive advantage on China's exports. The PBOC Vice Governor Yi Gang said the rumor was groundless. (despite a higher USDCNY reference rate fix at 6.4010 from 6.3306 yesterday). Yi Gang said there wass no basis for a continued yuan depreciation and that there is ample reserves to support the yuan. The PBOC statement gave relief to the volatile market and alleviated concerns of a global currency war. One economist pointed out that it is not a currency war if the depreciation if for fundamental reasons, judging from the the past weak economic data from China. (ie: declining exports, trade and inflation data).
The kiwi dollar fell another 20 points from 0.6570 to 0.6550 as the US dollar gained at the NY open following the upbeat number of the U.S. July Retail Sales 0.6% versus the 0.5% median forecast. The next support levels of the NZDUSD are: 0.6535, 0.6520, 0.6480. Resistance levels: 0.6580, 0.6600, 0.6620, 0.6638. (see the downward channel formation).
Chart: WorldWideMarkets Alpha Trader