Chart Book | Chart of the day: Closing the yuan gap

Since mid-June, although offshore yuan has been at a tiny premium to its onshore partner, the difference is irrelevant. A spread of zero is a good thing as traders accept them as equals. More importantly, we have seen some big moves in their exchange rates over the summer, with volume hitting almost a record high and observed volatility peaking at 6.75 per cent but now back to the long-term mean at 4 per cent. September’s rally from a low of 6.4425 per US dollar has brought people to their senses. The massive monthly hammer marks an end to this year’s corrective move lower, coinciding very roughly with a 50 per cent correction and trend-line support from the record low in 2014.

Nicole Elliott is a technical analyst