This is a strongly manipulated pair due to strong government intervention. (When they are in for it, is either you are in for a nice ride or kicked out of the party)
Yuan (offshore) well known as one of the controlled currency is facing couple of major issues on hand, trade war tension with US as well as weakening domestic growth. (not in Yuan’s favor)
It’s a known issue for strengthening Dollar alongside with weaker Q2 growth from CHINA to have weaken the Yuan this much. It speaks the obvious that previous fixing rate isn’t going to hold either as cheaper Yuan will be favorable for CHINA instead; at least to get their economy up a little. PBOC have done so much to ease their monetary policy by lowering RRR as well as interest rate in the past and they might have to hold back on deleveraging campaign; through all these I am bearish on Yuan for now.
Technical aspect as of writing: Fixing rate didn’t hold last night, strong price piercing through 6.75 level to high of 6.8367. Prices retraced down largely due to Trump’s comment on Fed hiking rates. While I see these as noise* I am expecting a temporary drop before USDCNH rally further. ***If price close at this rate 6.7914***
Later in the night we have data release and that will determine the pace of this pair. Manage your risk and we shall see how it goes again.
`Trade Safe
Yuan (offshore) well known as one of the controlled currency is facing couple of major issues on hand, trade war tension with US as well as weakening domestic growth. (not in Yuan’s favor)
It’s a known issue for strengthening Dollar alongside with weaker Q2 growth from CHINA to have weaken the Yuan this much. It speaks the obvious that previous fixing rate isn’t going to hold either as cheaper Yuan will be favorable for CHINA instead; at least to get their economy up a little. PBOC have done so much to ease their monetary policy by lowering RRR as well as interest rate in the past and they might have to hold back on deleveraging campaign; through all these I am bearish on Yuan for now.
Technical aspect as of writing: Fixing rate didn’t hold last night, strong price piercing through 6.75 level to high of 6.8367. Prices retraced down largely due to Trump’s comment on Fed hiking rates. While I see these as noise* I am expecting a temporary drop before USDCNH rally further. ***If price close at this rate 6.7914***
Later in the night we have data release and that will determine the pace of this pair. Manage your risk and we shall see how it goes again.
`Trade Safe
Trade active:
Trades triggered, lets sit and ride.
Comment:
Yuan is weakening but what matter next "is to what extend?" I am seeing Yuan heading towards lowest point 92.26 since May 2017.
In general Yuan will weaken further as PBOC wanted cheaper yuan. Boost export >> help China economy; improves liquidity blah blah blah. (macro economics)
Trading wise, if we dont get any fresh news from US side, USDCNH will be due for retracement. May look to add alittle more on specific dips.
In general Yuan will weaken further as PBOC wanted cheaper yuan. Boost export >> help China economy; improves liquidity blah blah blah. (macro economics)
Trading wise, if we dont get any fresh news from US side, USDCNH will be due for retracement. May look to add alittle more on specific dips.
Comment:
There we go... fresh news from Trump increasing tax to 25%.
What I will be watching next:
1. What is China's counter measure
2. Why China did not signal for any sign for trade talks? They did it on purpose to keep yuan low?
3. Trump's intention is after U.S company's lost* money? or to derail China's economy?
Not sure if anyone recalled a comment made by China officials "They Go Low, We Go High". So many ways to interpret this simple remark.
What I will be watching next:
1. What is China's counter measure
2. Why China did not signal for any sign for trade talks? They did it on purpose to keep yuan low?
3. Trump's intention is after U.S company's lost* money? or to derail China's economy?
Not sure if anyone recalled a comment made by China officials "They Go Low, We Go High". So many ways to interpret this simple remark.
Trade closed: target reached:
My trade for Yuan is done, upside is getting limited, RMB Index is nearing its lowest point.
PBOC is coming in, so is the trade war..
I am expecting a strong correction when Yuan hit near 6.9 level. If economic data still points in favor to short Yuan, I will update again.
PBOC is coming in, so is the trade war..
I am expecting a strong correction when Yuan hit near 6.9 level. If economic data still points in favor to short Yuan, I will update again.
Comment:
Here we go as mentioned earlier.
The retracement will be strong to rebalance* the recent weakening of Yuan.
PBOC adjusted RR again to strengthen Yuan this time round while it wss previously used to weaken yuan.
The retracement will be strong to rebalance* the recent weakening of Yuan.
PBOC adjusted RR again to strengthen Yuan this time round while it wss previously used to weaken yuan.
Comment:
Strong Dollar has dragged higher against Yuan. Not that Yuan is weakening, but in fact Yuan index is showing signs of strengthening in progress after previous PBOC intervention.
Yuan Index this week held at 92.91 vs last week 92.69
Yuan Index this week held at 92.91 vs last week 92.69
Comment:
Continued weakening of Yuan due to investor's expectation for PBOC further easing push Yuan weaker alongside with the recent bull Dollar momentum.
China's finance ministry is telling local governments to accelerate special bond sales to stabilize investment, after fixed-asset investment growth slowed in July to the weakest on record.
However upside is limited as we are nearing 1:7
I am not going to chase but will follow PBOC closely for sign of strengthening Yuan.
P.S U.S-China trade war issue is still ongoing without a hard conclusion at the moment
China's finance ministry is telling local governments to accelerate special bond sales to stabilize investment, after fixed-asset investment growth slowed in July to the weakest on record.
However upside is limited as we are nearing 1:7
I am not going to chase but will follow PBOC closely for sign of strengthening Yuan.
P.S U.S-China trade war issue is still ongoing without a hard conclusion at the moment
By executing 1-week forward usd/cnh trades yield modest positive carry interest for holding dollar and PBOC is still letting the market play out by its own.