The markets didn’t seem to know what to make of China’s decision to adjust its currency on July 21. The initial reaction pretty much played out according to conventional wisdom regarding the event, but the move had no momentum; traders seemed to digest the narrow scope of the revaluation and place it in context of broader market action and world events.

It shows some of the immediate reaction to China’s announcement, which occurred around 6 a.m. ET. The dollar index chart (DXY, upper left) shows the buck dropped (challenging its July low) before bouncing back to close near the middle of its range for the day. It then followed with three days of higher highs and higher lows.

The U.S. dollar/Japanese yen (USD/JPY, upper right) rate fell hard on the news and stayed down for the remainder of the New York trading session on July 21, but it began marching steadily higher the next morning.

The Euro/U.S dollar (EUR/USD, bottom left) initially got a rise out of the news, but it sold off steadily before mounting a rally in the late morning in New York, then selling off again to close near where it started. Interestingly, it sold off through July 26 — counter to what many had predicted, given projected dollar weakness after a yuan revaluation. The September E-Mini S&P futures (ES, lower right) reflected the stock market’s initial enthusiasm over the news, but like the EUR/USD rate, the contract reversed to the downside before regaining its footing in the regular day session (after 8:30 a.m. CT) trading hours. However, late in the trading session, the contract retreated to close toward the bottom of its range. Three days later, it was essentially marching in place.

The July 21 market action was somewhat clouded by the breaking news of new bomb threats in London, two weeks after the July 7 terrorist attacks that rocked that city. The British pound (not shown) initially rallied against the dollar on the news of Chinese revaluation, but sold off when the news of the explosions broke. However, the market stabilized and, by 1:30 p.m. in New York trading, it had rallied nearly to its high of the day.