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Traders have 2 questions about China's stunning currency devaluation

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The big news on Tuesday is China's move to devalue the yuan overnight.

Will China's move ignite a currency war?

Will this have any impact on the timing of the Fed's expected rate hike?

It's a modest move, all things considered, but it's revealing with regard to how the Chinese government sees the economic situation in China.

Namely, by shifting the midpoint of its peg against the US dollar, China appears to be admitting that it must take measures to stabilize its flagging economy.

Of course, in the context of the some of the more extreme devaluations we've seen throughout financial history, this move isn't much.

The Fed, for its part, hasn't made much reference to China in recent months.

Additionally, the 2% devaluation of a still-pegged currency doesn't quite seem like the start of a war.


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