FXStreet reports that economists at MUFG Bank said that the US dollar is lurching lower with some key developments pointing to further weakness over the short-term.

“Onshore, the CNY advanced to its highest level versus USD since June 2018 encouraged by a PBOoC reference rate that indicates the authorities are comfortable with the move. One of the implications of China’s complaint this week of excessive speculation in the commodities markets is the belief that the authorities have become more concerned over the threat of inflation and therefore CNY appreciation will be met with less opposition.”

“Of course, the authorities in China have greater freedom to allow for the break lower in USD/CNY given the overall relative stability of its currency on a trade-weighted basis.”

“This break in USD/CNY is important and does open up the potential for broader USD weakness and at the margin means a little less concern from the ECB over EUR appreciation.”