Bitcoin 
Ethereum 
Tether 
BNB 
XRP 
USDC 
Solana 
TRON 
Lido Staked Ether 
Figure Heloc 
Friday’s close was 7.0063. Since then:China launches “Justice Mission 2025” drills simulating blockade around Taiwan (more info)China to conduct live-fire military drills surrounding Taiwan on December 30China flags more proactive fiscal policy in 2026 to boost domestic demandChina industrial profits slump at fastest pace in 14 months as demand weakensAdded:the People’s Bank of China injects 482.3bn yuan via 7-day reverse repos in open market operations, rate remains 1.4%after maturities today the net injections in 415bn yuan-The People’s Bank of China daily USD/CNY reference rate is a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence.
This article was written by Eamonn Sheridan at investinglive.com.
💡 DMK Insight
China’s military drills around Taiwan and fiscal policy shifts are shaking up market sentiment right now. With Friday’s close at 7.0063, traders should be wary of increased volatility in the yuan as geopolitical tensions escalate. The live-fire drills scheduled for December 30 could trigger market reactions, especially if they lead to heightened fears of conflict. Additionally, China’s proactive fiscal measures for 2026 aim to boost domestic demand, but with industrial profits slumping at the fastest pace in 14 months, the effectiveness of these policies is in question. This could lead to a bearish sentiment in related markets, impacting commodities and regional currencies. Look for key resistance levels around 7.01 and support near 6.95. If the yuan breaks through these levels, it could signal a significant trend shift. Keep an eye on how institutional players react to these developments, as their positioning could influence short-term price movements.
📮 Takeaway
Watch for the yuan’s reaction around 7.01 and 6.95 as geopolitical tensions rise and China’s fiscal policies unfold.
