Forex Today: China's yuan revaluation triggers risk-on correction, volatility remains high

Here is what you need to know on Tuesday, August 6th:
- China has strengthened its currency at a higher level after it let USD/CNY top 7.00 on Monday. The move has improved market sentiment and allowed stocks to stabilize after the massive sell-off. Earlier, the US finally labeled China as a currency manipulator for the first time since 1994. Tensions remain high also around Chinese buying of agricultural goods which has halted.
- On Monday, the rush to safe-haven US bonds has pushed yields lower, resulting in a decline of the dollar. The disappointing ISM Non-Manufacturing PMI, at 53.7, has weighed as well. Speculation about the Federal Reserve cutting rates has risen considerably. Fed Governor Lael Brainard has said that she is monitoring developments closely.
- USD/JPY has risen above 106, commodity currencies have moved higher, while gold is seeing some profit-taking.
- The Reserve Bank of Australia has left its interest rate unchanged at 1% as expected, but warned that it may take longer to reach its inflation target and that rates will stay lower for longer. AUD/USD has ignored these words and rose on the yuan fixing.
- New Zealand's quarterly jobs report beat expectations with the unemployment rate falling to 3.9%. NZD/USD is on the rise.
- UK: Reports suggest that PM Boris Johnson may refuse to step down if he loses a vote of confidence, triggering a constitutional crisis. Opposition Labour plans such a vote in early September. Johnson's policies seem to serve as a preparation for elections and Germany assesses this is the most likely scenario. GBP/USD remains in the 1.2100 handle.
- German factory orders have jumped by 2.5% in June, better than projected and providing hope that the manufacturing slump may come to an end. EUR/USD consolidates its gains around 1.1200 after it took advantage of the dollar's decline on Monday. 
- The economic calendar features speeches by the Fed's Charles Evans and James Bullard – both doves. Also, US JOLTs job openings are of interest.