Yen and Yuan Watch: USD/JPY and USD/CNY Daily — 2026-09-20

Top developments

Yuan Breaks 6.70 Barrier on Eighth Straight PBoC Fixing

On September 18, both onshore (CNY) and offshore (CNH) yuan appreciated past the psychological 6.70 level against the USD, with offshore trading briefly at 6.6953. This marks the strongest level for the yuan since July 2022. The People’s Bank of China (PBoC) set the daily reference rate at 6.7521, marking the eighth consecutive day of strengthening the fixing. This move is widely interpreted as pre-summit positioning ahead of the meeting between President Xi Jinping and US President Donald Trump, aiming to offset recent dollar strength and demonstrate currency stability.

BoJ Signals Mixed as Yen Weakens Post-Decision

Following the Bank of Japan’s policy decision on September 18, the yen weakened after Governor Kazuo Ueda provided mixed guidance on future rate hikes and yield curve control adjustments. While core inflation cooled to 1.7% in August—below expectations—the BoJ’s stance has kept traders uncertain about the pace of tightening. The USD/JPY pair saw increased volatility as markets recalibrated their expectations for a potential end to negative rates or further normalization, with the Ministry of Finance remaining silent on immediate intervention despite the yen’s softness.

Carry Trade Flows Shift from Yen to Yuan and CAD

As the yen appreciates roughly 6% against the dollar since late July, global investors are increasingly looking to alternative funding currencies for carry trades. Strategists note that the Chinese yuan and Canadian dollar are emerging as substitutes for the yen in carry trade strategies. This shift is critical for USD/JPY dynamics, as reduced demand for yen-funded positions may limit further downside risk, while increased attention on CNH could amplify volatility in China’s currency markets if policy guidance tightens further.

Local view

Chinese financial media, including Phoenix Finance and Sina Finance, highlighted the "important breakthrough" of the yuan breaking 6.70, attributing the move to strong trade surpluses and resilient foreign exchange settlement demand. Analysts quoted in these outlets suggest that while the PBoC is guiding the currency higher for diplomatic leverage, they expect short-term fluctuations as exporters begin converting dollars into yuan at more favorable rates. In Japan, Nikkei reported that the BoJ’s "rate check" interventions have intensified market scrutiny, with local commentators debating whether the current USD/JPY levels reflect fundamental divergence or speculative overshooting.

Context & numbers

• USD/CNY Fixing: 6.7521 (Sept 18), strengthening for the 8th consecutive day.
• Offshore Yuan (CNH): Traded near 6.6953, a four-year high.
• Japan Core CPI: 1.7% year-over-year for August, slowing from previous months.
• Yen Performance: Up ~6% against the USD since late July, driven by intervention and BoJ tightening expectations.
• Intervention Scale: Japan’s total yen-buying intervention in July-August reached ¥15 trillion, the largest on record, though market pressure persists.

On the radar

• Trump-Xi Summit: Scheduled for later this month; any joint statements on trade or currency practices could trigger immediate volatility in USD/CNY.
• PBoC Policy Guidance: Watch for the next few daily fixings; a pause in strengthening could signal comfort with current levels or a shift toward export support.
• BoJ Next Meeting: Markets await clearer signals on whether the next rate hike is imminent, which would directly impact USD/JPY carry trade viability.