The yuan is serving as a key tell about where other assets are going, particularly since the Chinese currency suffered a sudden plunge in a swift depreciation in August, according to technical analyst Rich Ross of Evercore ISI.
For starters, the yuan drop presaged a similar-looking fall in U.S. equities.
"Yuan strength equals risk-on," meaning that it rises alongside risky assets like stocks, Ross said in a Monday "Trading Nation" segment. That's why the chart of CNY/USD (the inverse of how the currency pair is normally shown, so that it is the same chart flipped over) "looks just like the S&P 500."
The comparison also works in the near term, as the yuan recently rose as China announced stimulus, just as the S&P has been rising. In fact, Ross reports that both charts have broken their 50-day moving averages.
Since the inverse yuan chart looks like the S&P 500, it is no surprise that USD/CNY looks just like the chart of the CBOE Volatility Index, or the VIX, which generally records market fear.