CNYUSD trade ideas
ridethepig | CNY Market Commentary 2020.02.16On the technicals there is little to update while the resistance holds, despite the bounce via PBOC intervention on coronavirus risk flows. The only level in play to the topside is 7.0248 as it caps the highs in the current wave. Anything above will unlock a leg towards the next barrier at 7.0733.
The coronavirus short-circuit sadly temporarily disrupted the USD devaluation / reflationary growth theme. I am still holding shorts and active looking for a test of the 6.825x. Anything below that will open the floodgates for the major break:
As usual thanks for keeping support coming with the likes and comments, we'll open up the short-term flow after the Tokyo open in the comments below for those trading live!
Coronavirus impacted Chinees yuan Coronavirus has damaged financial markets of China. Chinees stock droped almost 7%, economic grow with 2%. Of course Chinees yuan planged after market open today, now trading at 7.0202, next target 7.0719
Usdcny bullish reversal Following a weekly bullish engulfing candle stick pattern, price has jumped and we can see what seem to be an ascending channel we shall watch for further development on this as the bias remains bullish in the near term.
Big secret - when to buy & sell bitcoin (you decide)Using USDCNY (Caveat- LINE BREAK CHART & small sample size) See what happens when MACD signal line drops into negative territory. Significant support line for bitcoin price. See Oil and Gold price effect on support line. Will coronavirus shut down bitcoin mining in China? What will happen when Chinese market reopen. Is bitcoin about to explode? Bahhhhhh........ Hmm.............. NOT ADVICE. DYOR.
USDCNYBuyers have come into market on Weekly for a continuation to upside as currently in an uptrend as highlighted, Taking into account the current global issues and health concerns, CNY may retraced before continuing north, see what happens during US Session as US futures have declined considerably
USDCNY Broadening WedgeA broadening wedge has formed on USDCNY. This may lead to a breakdown, however the short term outlook is quite bullish. With a 0.80 Regression uptrend.
Possible coming short for USDCNYWait for the days candle to finish forming before entering. Previous support zone has been broken.
Candle currently taking hammer formation, showing weak bullish sentiment.
Overall trend is also bearish.
R/R: 1.58
Entry: 6.9602
TP: 6.9350
SL: 6.9761
Good luck! Feel free to let me know what you think.
Yuan Keeps Gaining With Phase One Deal on Jan. 15President Trump's trade war against China was one of the dominant stories in financial markets over the course of 2019. But now an important currency is moving as it fades: the Chinese yuan.
This chart shows the U.S. dollar against the yuan, so price drops are bullish for the Chinese currency.
It shows the yuan has been gaining against the greenback since early September, right around the same time that Beijing agreed to trade talks in Washington. That marked the "beginning of the end" for the tensions.
The People's Bank of China controls the yuan, so it's not much of a trading vehicle. However, it's had a strong historical correlation with Chinese equities in the past:
-USDCNY fell sharply between mid-2005 and late 2008. The iShares China Large Cap ETF surged over the same period.
-USDCNY started to climb in mid-2015, corresponding to a selloff in FXI.
-USDCNY fell sharply between May 2017 and April 2018. Chinese stocks, especially tech companies like Alibaba , surged.
Another trend is China's attempted shift from manufacturing center to financial hub. This has entailed domestic financial reform (most of it forgotten amid the trade war). Second, indexing companies like MSCI are boosting allocations to China , potentially channeling billions of dollars of additional capital into its domestic stock markets.
That kind of transformation also goes hand-in-hand with a stronger yuan.
Just today the White House announced a January 15 signing date for Phase One of its trade deal with China. This creates the potential for further bullishness toward China in the New Year -- especially given the weakness in the U.S. dollar .
In conclusion, we don't yet know what the New Year will bring. But USDCNY could be a useful indicator which way things are going. Make sure to follow our ideas for potentially actionable China-related ideas 2020 based on this trend.
US dollar falling against Chinese YuanThe US dollar has initially tried to rally during the trading session on Friday but then turned around to form a bit of a shooting star and the psychologically and structurally important 7.00 CNY level. Ultimately, this is a market that measures risk appetite more than anything else and if we do pull back from the 7.00 level, the US dollar will probably drop down to the 6.95 handle, and then perhaps even the 6.90 level. Ultimately though, this is a market that measures massive amounts of risk, and if the US dollar falls it shows that we get a big “risk on” move around the world, not just in this pair.
A lot of this will come down to the US/China trade situation and whether or not we are moving forward. You can see that we have been grinding lower and significantly forming a bit of a down trending channel. We have recently bounce from the 50% Fibonacci retracement level and now sits just above the 200 day EMA. That being said we are making a series a “lower highs”, and of course “lower lows.” The last vestige of support could be the 200 day EMA or the 50% Fibonacci retracement level. Pay attention to the headlines because of things get good for risk appetite, this pair should continue to drop from here. Beyond that, it’s very likely that we will continue to see more of a grind lower as long as nothing too drastic happens. Unfortunately, it will only take one headline out there to turn things around. If the market were to break above the 50 day EMA then things stood start to shoot straight back up in the air in a bit of panic. Things have cooled down over the last several weeks though, so it’s very likely that we continue to drop.
15 December, the US will implement tariffs on $156B on ChinaTo offset the additional tariffs the CNY would have to depreciate - although the Chinese authorities have said that they won't pursue quantitative easing.
If there is a formal announcement to suspend or delay the tariffs, the market would expect a more positive risk reaction and that is currently being priced in. WIth the USDCNY trading around the 6.90 and below the 7.00 psychological level that was key back in the summer.
If Phase one of the deal does not pass and the tariffs go-ahead, we would expect the USDCNY to trade above the 7.100
ridethepig | CNY 2020 Macro MapIn a nutshell, I am expecting Copper to keep Chinese Equities afloat and recover Q120 with less uncertainty via fiscal policy and a rebound in exports. For those following the latest Hang Seng / Copper chart:
For the macro side, CNY will find a strong bid via trade tensions easing as we move into 2020 US elections. China's outlook for future generations is changing and while Trump protectionism causes USD devaluation via FED permanent operations. Flow wise I am expecting a lot of business to be done within 1H20 in FX markets, my main targets for 2020 remain at 6.85xx with momentum picking up in the decline through 2021.
The reflationary theme is picking up traction and if we see the Dollar materially decline it will be enough to provide some further growth to Chinese exports in Q1, however from Q2 onwards it will be countered via capex softening and provide a choppy consolidation range. I look for this to break in the second half of 2021 which will complete the macro driven pullback towards my main swing target at 6.50.
From a technical lens it should be no surprise we are trading the same key 6.949x from before in USDCNH:
While for those tracking the long term dollar devaluation we have covered the macro side in previous charts:
Good luck all those planning FX trades into 2020. The environment is going to become increasingly difficult as investors position around US election risks, more 2020 FX outlook reports along with other strategy research in the coming days and weeks. Thanks for keeping the support coming with likes and comments!
Testing RESISTANCE 0.7050After Staging Rebound from Overselling, price gathered STRENGTH to test RES 0.7050 ... ?
RENMINBI AS A TRADE WAR PROXY & DOLLAR SHORTAGE(for macro nerds)USD/CNY: Two detailed bullet points ; Series on Currencies(feedback's always welcomed) - 7th of December 2019
First of all, this chart is simply a guide on how to analyse Dollar:Renminbi as a trade war proxy. As there are many economic variations and possible outcomes for 2020 at this point in time, I will not give recommendations for this chart. These are my subjective technicals and I will not analyse them, so don't follow them blindly. More importantly, let's take a look at some of the macro and fundamental perspectives.
1. 7 is a key level for the USD/CNY. Somehow the cross in August coincided with the inversion in yield curves, and the height of the trade war fears. Data backing up the cross at 7 is the decrease in Chinese holdings of treasuries (Ref #1), YoY down -4.27% . This indicates, that China is attempting to create a stronger dollar environment that corresponds with higher treasury yields, in order to alleviate some of the trade war tariff pains(higher yields=stronger $ ). Of course, treasuries are a global market, and China isn't able to completely influence the dollar At the stage with all the noise, it's very hard to exactly know what the trade war outcome will be, so I've given some of the scenarios on the chart. Furthermore, as FED cut rates, so did the PBoC (despite higher CPI , pork's here to blame) . This was their way of signalling that they're ready to devalue the yuan in case the trade war continues (Ref #2). The simplest way to read the Dollar/Yuan chart is with a dummy variable approach: If USDCNY<7= higher probability of a trade deal success and vice versa.
2. The DXY and USDSEK overlays combined with the 5-year lows in some of the emerging markets currencies(REF #5), indicating a global dollar shortage . These fears were somewhat dealt with as we had (Ref #3) three rate cuts this year and the start of QE:4, after the the repo market frenzy in August and September . Going into 2020, despite the FED being overly optimistic, I'm expecting that rates will further slide down to at least 1%. It all depends on how ambitious Trump is in terms of his trade war goals.
The importance of USDSEK , simply is the fact that Sweden is such an open economy and the effect of these events mentioned above can serve as a way to cut all the trade news noise. A s expressed in the USDSEK chart, currently Swedish manufacturing numbers are well below 50, without the expected bounce for November(REF #6), despite the strong performance from equities . Along with other swedish economic data that's also performing poorly, without a doubt, this raises recession fears even further.
To conclude this analysis on the Dollar:Renminbi, as mentioned in the intro- at this point there are many possible variations and many factors that could be analysed. I've already written a dozen posts on the trade war and the 2020 elections and it seems that it's impossible to give an easy and simple answer. One thing to expect for certain in 2020, is a rise in volatility . As the election cycle nears, there might be an increased pressure on Trump to get a deal done, so hopefully we'll get a more clear picture of the outcome of the trade war. Nevertheless, phase 1 is somewhat unimportant. Practically all the important negotiation points are pushed for phase 2 . Future may after all, seem interesting, but at the same time gloomy, and the show's just about to get started.
This is it for Dollar:Yuan, feedback is always welcomed!
-Step_ahead_ofthemarket-
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References & Disclosure:
1. Chinese Treasury holdings: ticdata.treasury.gov
2. PBoC Prime rates: tradingeconomics.com
3. FED Rates super cycle:
4. Treasury Yields:
5. Latin(emerging) markets currency index: www.bloomberg.com
6. Swedish Manufacturing data: tradingeconomics.com
Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content- contact me through any of my social media channels.
Could positive momentum on USD/CNY continue? Risk overall continues to ebb and flow on US-China trade uncertainty and looks somewhat asymmetric, tilted to the downside, based on our view that the HK Bill if passed through the House of Reps could seriously complicate trade talks and the signing of Phase 1. Stock markets are on the rise, and the risk-on atmosphere is weighing on USD, JPY and gold.
Last week the US dollar made its the best performance in nearly 3 months against the Chinese Yuan. USD/CNY is likely to hold below 7.05/04 in the near-term with a possible decline likely to be limited around 7.00-6.95.
On other side, the technical indicators are constructive, and there appears to be near-term potential rally to the 7.06/08 resistance area (the highs since October's end). The dollar moved above its 20-day SMA for the first time since mid-October. Also on the 4-hour chart this SMA coincide to the middle line of the Bollinger Badns and the price broke above it. It may offer support now.
You should take in mind also China PMIs data at the end of the week. Another decline could seriously impinge on the soft landing narrative markets have been forming over the past few weeks and draw a market-negative reaction.
Major Reversal In Play For CNY - A Must Track!!A good time to update the CNY chart with US away from their desks for thanksgiving. Both sides rolling back tariffs means that CNY has unlocked the gates for a retrace towards the key 76.4%.
On the monetary side, updates from PBOC who continue sitting on the bid and are unlikely to change stance and keep CNY strong against the crosses, and as long as this remains the case the highs will be capped. Risks to my thesis come from another escalation in protectionism.
For Chinese Equities the important and key 2793 is back in play again:
Those following previously will remember trading the breakout to the topside, which is now clear was the final exhaustion leg. A textbook one to track for those wanting to dig deeper:
For the technicals we are tracking a similar leg in nature to the sell-off in 2017, initial looking to target 6.9xx with extensions as low as 6.6xx and 6.4xx. While to the topside invalidation will come via a break of the highs.
Best of luck all those on the CNY bid, jump into the comments with any questions and your views on CNY!
USDCNY - DAILY CHARTHi, today we are going to talk about USDCNY and its current landscape.
We can observe at this timeframe, a confluence of technical factors, that entail a setup which might drive this asset to a new movement. The details of our analysis are highlighted in the chart above.
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FX Market Wobbly ahead of Trade War NewsFX Market Wobbly ahead of Trade War News
The FX market is off to a soft start this week as traders await in silence new updates regarding the US-China trade war.
Against the Japanese yen, the dollar was slightly higher at 108.81 yen.
Against the euro, it was $1.1062, recovering from a monthly low of $1.0989 that came out on Thursday.
Meanwhile, the British pound gained 0.2% to a two-week high at $1.2929.
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The surge came after British Prime Minister Boris Johnson said that Conservative Party bets at the December elections had promised to support his Brexit deal.
The US dollar index, which pits the buck against other major currencies, was lower at 97.905. This figure is the index’s weakest level since November 7.
Elsewhere, the Aussie traded 0.2% lower at 0.6808 against the dollar. The Reserve Bank of Australia will release its policy meeting minutes on Tuesday. The ECB, meanwhile, will release its minutes this Thursday.
FX Market Standing by for Trade War Updates
Meanwhile, the CNY continued to be weak against the dollar at 7.0112.
The People’s Bank of China cut interest rates during its seven-day reverse repo agreements. That was the first time since October 2015.
China is currently trying to boost business confidence in the country after last week’s weak economic data results.
Apart from that, traders have yet to see any big update on the trade war negotiations between the US and China.
Chinese state media Xinhua reported that Vice Premier Liu He talked to US Treasury Secretary Steven Mnuchin.
He also spoke with US Trade Representative Robert Lighthizer about a phase-one trade deal over the phone over the weekend.
The report said the two sides had “constructive discussions” regarding “each other’s core concerns.”
At the same time, positive signals came out of White House Economic Advisor Larry Kudlow. Last Friday, Kudlow said that the US and China were close to a deal.
Dollar Firm on US-China Tariffs RollbackDollar Firm on US-China Tariffs Rollback
The dollar took a neutral stance on Monday, as traders awaited further updates on the US-China tariffs rollback.
The dollar index, which gauges the buck’s strength against a basket of six major currencies, was little changed at $98.26. It was not far from a four-week low.
Against the euro, the currency slightly moved at $1.1031, reflecting investors’ concern over the risk of a deal collapsing.
The greenback fell by 0.27% to ¥108.96 against the yen, as the unrest in Hong Kong continued.
The latest reports stated that a Hong Kong policeman fired live rounds at protestors, and at least one person was wounded.
Still, the Japanese currency held near its five-month high of ¥109.49 reached on Thursday.
News of the latest escalation of violence in the region hit the Chinese yuan as well, dropping 0.18% to $7.0078 in offshore trade.
Disappointing producer prices data also weighed on the yuan. The National Bureau of Statistics (NBS) showed on Saturday that the country’s producer price index (PPI) stumbled 1.6% in October.
That was the weakest year-on-year price decline since August 2016. It also revealed the result of both demand and supply pressures on the world’s second-largest economy.
Dollar Little Changed amid Hopes for US-China Tariffs Rollback
The greenback’s moves were minimal. Meanwhile, progress over current trade agreements between the US and China puts investors in a cautious position.
Both countries’ representatives stated last week that some of the duties would be withdrawn as part of a preliminary deal.
Although US President Donald Trump later denied the news, he did not entirely dismiss the possibility of a deal.
Market participants have become more cautious over the potential positive impact for global growth from a partial US-China trade deal following comments from President Trump, according to currency analyst Lee Hardman.
Nevertheless, Hardman sees market confidence to continue hopes that the US-China tariffs war, which has significantly struck the global economy, might be coming to a close.
A forex trader in Tokyo also stated that seeing China’s recent data, the US president could be telling the truth about China wanting a deal more than he did.
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