The improving stock-market environment as people start to price in the end of Fed tightening has positive effects on Asia. Lower interest rates are positive for stock markets and they diminish the importance of relative yields.

We're likely to break the 8 yuan per dollar level this month. The diplomatic atmosphere has played a role as it suits Chinese interests to move a little quicker as the U.S.-China relationship is at risk of deterioration.

There's an element of diplomatic pressure coming to tell...but it's only a contributing factor. Tactically, the best way for the Chinese to move to a stronger currency is to do things in a staggered manner. Two steps forward, one step back.

If China is happy to see local interest rates rise, then it's happy to see some tightening monetary conditions in general and therefore could arguably be more receptive of yuan reform.