The Chinese yuan has had its biggest one-day fall since 2005, tumbling 0.59 per cent.
That’s a huge drop for a currency that has been largely rising for the best part of 5 years, and which until recently had been widely tipped to appreciate further against the US dollar.
China’s State Authority For Foreign Exchange said earlier this week that the yuan’s recent weakness was normal in the two way flow of currencies.
But to those of us who’ve spent a few too many years FX trading, this sounded a bit like the support a coach gets just before he gets the axe.
That seems to be how the market is viewing the weakness: after a night when Fed Chair Janet Yellen gave succour to the bulls, concerns over China are worrying traders in Asia today.
Certainly there is no need to panic, because each time we’ve seen Asia sell off recently, US markets have rode to the rescue.
With the Shanghai Composite down 0.95 per cent to 2,028, the ASX has hardly budged, down just 6.4 points to 5405 as the February month ends.
But FX markets are a little more watchful with USDJPY sitting at 101.61 and the Aussie dollar slipping back a little to 0.8940.
It just might be an interesting final night to the month of February with some very important European CPI and US GDP data.