CNY Depreciation - What does this mean for the Fed?

In practicality, the PBoc will have to buy USTs in order to weaken their currency although China are already the largest holder of USTs outside of the Fed.

- To weaken CNY the PBoC will be buying USDs (as well as other currencies) in the market, a move that could strengthen the USD against other major currencies.

- However, several analysts have noted that today's decision is likely to be a one-off adjustment and further CNY devaluation is not likely.

- Some have speculated that a stronger USD could delay the Fed from hiking in the near-term, however the Fed will want to keep credibility and are likely to cite policy independence.

- No Fed speakers are scheduled to speak until tomorrow when Fed's Williams is due at 1330BST.