The Chinese yuan, particularly the offshore CNH, fell by almost one percent last week - its most since September of 2011. Saxo Bank’s John Hardy says investors need to realise “this really is the most important story” right now and that “all of our eyes need to be on China”. 

John explains the drop is “obviously" an intentional move by the Chinese authorities. He says: “Most likely what’s going on here is that they’re trying to stamp out this huge carry trade that is going on, where investors are trying to get dollar funding offshore, bring it back into China, and take advantage of much higher rates in China."

He adds: “I think that it’s very likely that authorities will continue to sow some uncertainty. If you look at the bigger picture, the Chinese currency is vastly overvalued and a reality check may come about.”

Read more about John's predictions here:

http://www.tradingfloor.com/traders/john-j-hardy