With China now closed for all intent and purpose for a week as Golden Week arrives, it appears The PBOC wanted to leave the market a message. Clear and direct intervention in offshore Yuan has ripped it 800 pips higher in the last 2 days to its highest since mid-December and stronger than onshore Yuan. However, while PBOC may have won this battle, surging CDS suggest the currency war is far from over.

Offshore Yuan has ripped higher (just as it did in early Jan)…

This is the strongest offshore Yuan against onshore Yuan since September…

But out of the reach of PBOC direct intervention, CDS markets are still implying a dramatic devaluation looms…

So while PBOC may have won this brief battle into Golden Week, the speculative war on their currency is far from over.