For those people don't believe renminbi. There're 1.3 billion populations in China and renminbi is consuming products all of the world includes USA and EU and Japan. It's devaluated 10% and will do another 10% for reach its target USDCNY 7.0 (7.2 high) soon...
If this window is missed then a huge pull back, harmonic patterns were being built. It means something of fundamental changes, like BOJ intervention.
I think this pair should be pegged at 7.0-7.2 next year. Trump will talk about the peg with China but it's already there. The platform is forming because Renminbi is expecting a hike. Not like USA, China has a huge reserves the hike could be huge too. If Renminbi and weighted JPY rise and EURO is ending QE. I don't think DXY will go too far now. Be careful, stocks will fall like last year and could be worse because the inflation rising.
Central banks tend to add the interests into the inflation data for balancing the purchase power by Fisher's equation. It'll bring more inflation expectation and the self fulfill machine is on working.
There's an important bank meeting is holding now in China which has been scheduled in every 5 years from 1997. We're waiting for the results. I predict that Mr. Zhou will be replaced and following with the hike window in 13th. March. 2017.
An very healthy cycle is coming.
Here's some opportunities, PPI is leading the CPI, the PPI now is as high as the year of 2011 if you guys can see it. That means the factory costs will be distributed into consumers prices for pushing the CPI higher to force an inevitable hiking.
I suggest buying A shares from some inflation sensitive sectors. The durable consumers sector and the consumer staples sector like electric applications and auto mobiles. Also the basic raw material sectors could be forming a profits taken area for the pullback in several months.
The hike is good for the rich people but not those unfortunates. If you don't invest something then your purchase power will be still weakening from inflation going higher as the same the devaluation of the currency. The good investment is the key to your financial success but not bank saving or begging form rich people for free, right?
After the PBOC raises the interests of Renminbi at first time from 7th. July 2011, all of the global markets will be dropping for about 11 weeks in 3 months and the second hike will be following. I suggest holding cash and taking all your profits now from assets before the hike. We can buy them back after the purchase power recovering. Then you could buy all kind of assets but artificial one because the real inflations comes and the later one is failed. The oil and the food correlated with the artificial inflations, BTW.
"SECRETARY ROSS: And the most interesting thing to me was they expressed an interest in reducing their net trade balance because of the impact it’s having on money supply and inflation. That's the first time I’ve heard them say that in a bilateral context."
I want to make this simple and clear. USDCNY and USDCHN will be pegging at some where for several months and the Renminibi will be getting stronger. China foreign reserves shall flat and will decrease.
North Korea nuclear will be deleted with or without China's permission. Good for China's safety long run.
Thank you BOJ and Japan! For saving A shares!
Thank you FRB and President Trump and America people! For supporting always!
This publish ends here! 40 months cycle completed!
1, It's pegging for 1 more year as I predicted to make sure that the USA and China are sharing the same core inflation. If the PBOC called it "counter-cycle parameter", that means Renminbi and US dollar shall fall together ( From currency cycle perspective Renminbi should be rising with new cycle now).
2, From 2013- 2017 DXY rose 30% and USDCNY rose 15%, this told us that Renminbi rose 15% during 3 years period which is typical 40 months cycle of it. If we have the pegging for 1 more year and DXY drops 15% then we go back to 2013 Renminbi's purchase power where USDCNY was at 6.0.
3, Again I'm expecting the USA growth reaches 3-4% GDP target and 3-4% inflation target. The China will benefit from 15% devaluation of Renminbi too, for the inflation and markets both are rising, the economic statistics shall be surprising the traders. We're still watch for the A shares rising like always have different point of view with speculators, the investors' view.
4, The PBOC minister has an seriously father-son attitude problem from no communication and no explanation but only punishments, to markets and traders , to investors, to people. This has to be stopping ASAP, expecting a new minister has good communications and better people relations in several months.
Let's see if the IMF's warning of an huge credit crisis will happen in China or not, by the PBOC's suicide money policy.
I urge the China top authorities replacing the PBOC's minster ASAP or an huge crisis could be on the edge.
The PBOC now really needs a new minister not only because Mr. Zhou did it wrong in 2015 but also a fresh blood is a better choice for an healthy cycle.
Please pay more attention to Mr. Jiang Chaoliang, he has a good relationship with the HSBC. Expecting he takes the place and the China shall build a supper administration central bank for good financial security like the BOE structure. A new Renminbi's cycle should have begun.
This's a signal for all Chinese traders, please take your last chance, for investment consideration...