Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange. Drew Angerer | Getty Images

Wall Street is obsessed with the yuan right now. At 9:44 a.m. ET, the Chinese offshore currency hit an intraday low against the dollar. Merely two minutes later, the S&P 500 slumped to the low of the day of 2,824.45. Stocks quickly rebounded in the afternoon with the S&P 500 erasing a 2% loss just when the yuan started to stabilize.

S&P 500 vs. Dollar-Yuan

Source: Koyfin.com (The above chart shows the U.S. dollar-yuan, so an increase in the line means the currency is weakening vs. the dollar.) The yuan came to the limelight after China weaponized the currency in the trade war with the U.S. to retaliate against President Donald Trump's tariffs. China on Monday allowed the currency to breach a psychological level — 7 against the dollar — for the first time since 2008, which triggered a deep sell-off with major stock averages suffering their worst days of the year. The simple explanation is this: If the yuan is falling, it means China is letting it decline to ease the effects of the tariffs and to poke Trump. That in turn means the trade war could drag on further and damage the global economy. During these wild intraday swings, traders are left searching for answers.