As you probably know, China is the biggest holder of the US debt (represented by Treasury bonds). Several sources report that China has just reduced its investments in US T-bonds. This is the biggest reduction since 2011.
The decision came as a response to the Fed's tapering of its monetary stimulus called QE3. The thing is that any such tapering devalues bonds, thereby making them less attractive for investors. The reduction was considerable – by $47,8bn or 3,6% down to $1270bn. At the same time international investors boosted their investments in US T-bonds by $78bn or 1.4% up to $5790bn.
In the meantime, the Chinese Yuan (also known as the Renminbi) is showing signs of weakness as USDCNY is rallying while trying to recover from the recent downtrend. At this point, the price has already hit 6,0915. If the price continues its rally while the Renminbi is weakening, the next closest level of resistance to face is 6,1055. Still, if the price goes back and breaks below 6,0580, the Yuan will resume its strengthening against the US Dollar.
