Speculation could be pushing up Chinese yuan

Expectations are high that fresh economic support is coming, says BK Asset Management.

According to an analysis from Kathy Lien, Managing Director of FX Strategy for BK Asset Management, the Chinese yuan is "benefitting from speculation that the Chinese government will do more to support their economy."

"If next week's GDP number is weak, there is a very good case for more fiscal or monetary stimulus from China," she added.

The observation came as the Chinese yuan hit its highest levels against the U.S. dollar in nearly 20 years last week.

Ms Lien further speculated that the since the U.S. Treasury is set to release its semi-annual report on exchange rates on October 15th, "there is a very good chance that China is allowing its currency to rise ahead of this report to avoid being branded a currency manipulator."

"The chance of this being true either partially or completely is very high even though the odds of the U.S. actually slapping China with this label is slim. The last time China was branded a currency manipulator was 18 years ago," she added.