US dollar → USD/CNY

Common explanation (Ripple · renminbi weakens): When the dollar strengthens, the renminbi comes under pressure.

This issue: US dollar at 45 (neutral), USD/CNY at 31 (cool) — at least one is in the neutral range (40⁠–⁠60), so we make no call this issue.

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

US dollar: 1.3% above its 10-year average, but by less than it usually is. USD/CNY: 2.4% below its 10-year average.

Tests

Does this link hold up?

Common explanationWhen the dollar strengthens, the renminbi comes under pressureSource: Federal Reserve Board, “FOMC Minutes, May 3-4, 2022” (2022).
Tested against our dataAgreement between the positions of US dollar and USD/CNY (same month), measured in the direction of the common explanation: −0.18. Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 5 of 8; data start only in 2013. In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.Not visible in our data
Periods when it did not holdAcross 8 5-year periods, out of step in 2013⁠–⁠2020.

History

The two lines, overlaid

Data: Bank for International Settlements (BIS), nominal effective exchange rate of the US dollar (broad basket); Federal Reserve H.10, via FRED (Federal Reserve Bank of St. Louis). Positions: our calculation.

US dollarUSD/CNY

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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