China's Leading Index has fallen to its lowest since Feb 2009 this evening, down 4 straight months from credit-driven 18 month highs. This economic weakness has exaggerated the already weak tone in Yuan trading this evening pushing CNY to its weakest in almost 7 months (against the USD), its furthest on record from the CNY Fix (10-month highs), and very close to the PBOC's upper +2% band for CNY trading. At 6.23, USDCNY is over 1000 pips weaker than the CNY fix. We suspect the weakness in Yuan is also driven by further corruption crackdowns as China will require VIP gamblers in Macau to undergo a record check.

China Leading Index hits lowest since Feb 2009…

By way of interest, The China Leading Index includes:

Hang Seng Mainland Freefloat Index, industrial sales, M2 money supply, new fixed asset investment, logistics index (total freight traffic and volume of transportation in major harbors), real estate investment (land and construction of residential properties), consumer expectations index, Treasury yield spread (spread between treasury securities with maturities of 7+ years and those with less than 1 year maturity).

Putting further pressure on the Yuan as selling pushes it to the weakest against the fix on record (over 1000 pips lower)

As a reminder, here is Goldman Sachs on the Yuan's unusual dynamics…