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USDCNH

USDCNH - Technical Analysis [Long Setup]🔹 USDCNH Analysis on 1HR chart - The current Trend is Bearish - Bullish divergence is present - If HH is break we will take long position 🔹 Trade Plan - Entry Level = 7.10808 - Stop Loss = 7.09450 - TP1 = 7.12170 - TP2 = 7.13520 🔹 Risk Management - First TP is 1:1 - Second TP is 1:2 🔹 How to Take Trade? - Only risk 2% of your portfolio - Take 1% risk entry with 1:1 RR - Take 1% risk entry with 1:2 RR Like and subscribe to never miss a new idea! ✌🏼
Long
by Bountysoul
2
Shorting USDCNH: Seizing the Opportunity Amidst Long Position...🚨 Shorting USDCNH: Seizing the Opportunity Amidst Long Position Surge 🚨 In this video, I explain why I'm shorting USDCNH due to a significant return of large long positions that we haven't seen in a long time. The 60-day bullish run seems to be over, and we're anticipating a potential drop. Key points covered: Analysis of the surge in long positions and its implications Why the recent 60-day bullish trend is likely ending Insights into the expected drop and its potential speed Strategic approach to shorting USDCNH in this unique market scenario While no one, including myself, can predict exactly how long this drop will last, I believe it will be quick. Join me as I break down the current market dynamics and share my strategy for capitalizing on this potential drop. Don't forget to like, comment, and subscribe for more trading insights and expert analysis. Let's navigate this market opportunity together! 🚀💹 And remember to hit the Boost Button on this video to support our Trading View community! Disclaimer: Forex trading involves significant risk and is not suitable for every investor. Carefully consider your financial situation and risk tolerance before entering any trade. Always perform your own research and seek advice from a licensed financial advisor if needed.
Short
by TruthakaWallStreetakaCookie
Just a quick note on the outlook for Chinese yuan futures...Exploring the "Condor" : A Look at the Chinese Yuan Futures In the realm of option trading, the term "Condor" refers not to a bird of prey, but to an intricate options strategy known for its non-directional nature. This strategy, aptly named after the wide-winged condor, involves positioning four options at once, aiming to profit from low volatility in the underlying asset. The essence of the Condor strategy lies in its ability to limit both gains and losses, creating a balanced risk-reward scenario for traders who anticipate movement and price consolidation before expiration date in certain market range. Recently, a significant portfolio was recorded on the CME exchange, with an expiration date set for October 4, 2024. This portfolio is noteworthy not only for its size but also for the expectations of its owner. The belief is that the price of the Chinese yuan futures will hover between 7.25 and 7.45, a range. The implications of this portfolio are manifold. For one, it reflects a sentiment that could influence other traders' strategies and market expectations. Additionally, it highlights the importance of understanding options strategies like the Condor, which can be pivotal in navigating the Forex market, especially when dealing with currencies like the Chinese yuan. As we look ahead, we will undoubtedly keep a close eye on this portfolio, analyzing its performance from the yuan's impact. Forex Traders might (better say "should") consider this a bellwether for future movements, making it a focal point for those looking to gauge market sentiment.
Long
by ClashChartsTeam
USD/CNH: BofA’s Caution, JPM’s WarningsUSD/CNH: BofA’s Caution, JPM’s Warnings Bank of America (BofA) has expressed caution about betting against the US dollar in the face of recent improvements in sentiment towards China's economic policy stimulus. Recent policy actions by China have sparked optimism, leading to a weakening of the USD. However, BofA advises against making hasty financial moves based on these developments alone. BofA believes that the effectiveness of Chinese Economic policies in stimulating significant new economic activity remains uncertain. Investors are encouraged to wait for more definitive signs of a sustained recovery in China's credit and property sectors before making significant currency moves. Just last month, BofA expressed a bearish outlook on several Asian currencies, including the Chinese yuan, South Korean won, Taiwan dollar, Thai baht, and Vietnamese dong. BofA anticipated sustained depreciation pressures on the yuan into the second half of the year due to several factors particularly due to the delayed easing by the Federal Reserve. On the other side, Jamie Dimon, the CEO of JPMorgan Chase, has been continuing his warnings at the JPMorgan Global China Summit in Shanghai. Dimon suggested that the chance of stagflation in the US—a period of stagnant economic growth combined with high inflation—is higher than most people think. Last week, he did not rule out the possibility of a hard landing for the US economy.
by BlackBull_Markets
Ascending Triangle Points Towards Yuan Devaluation This SummerNote: the technical indicators show a TTM squeeze ready on EVERY TF except Monthly, which is about to happen shortly by this summer - which means a massive move will happen. BOJ will blow up this summer and will devalue against the dollar forcing China to devalue to stay export competitive. I see a 50% devaluation - which will have the opposite effect on everyone else. If China devalues, that means they invite inflation into their economy, which forces deflation throughout the whole world. This will push up the dollar and blow up everyone else's currency. I see the dollar TVC:DXY going to 140-160+ before it too blows up. Of course this implosion will be blamed on some external false flag event - while the FED trots out CBDC's via DigitalID anchored to social credit scores that allows the FED to effectively use negative interest rates via social credit scores and time value of the credits. Gold and silver really won't matter because people will be looking for food.
Long
by EmptyEternity
A stronger yuan could spell trouble for USD/JPYA downtrend has formed on USD/CNH since it failed to retest the 2022 high in September. Since then, a lower high, aggressive selloff and a bearish continuation pattern (rising wedge) has formed on the daily chart. The rising wedge projects a downside target towards the cycle lows ~7.1. If the yuan continues to depreciated (lower USD/CNH), it could prompt other Asian currencies such as the Japanese yen to also depreciate, in order to remain competitive with trade. And as USD/JPY is approaching 152 - a level it failed to test due to BOJ intervention (and subsequent concerns of another intervention) - there's a reasonable chance that USD/JPY may struggle to break above 152. For now, USD/CNH looks ripe for a move lower given the double top / rising wedge around the 50% retracement level, and bearish momentum picking up. Bears could have a stop above the cycle highs and target the lows around 7.1. But if the Fed begin to drop dovish clues further out, it could also break below 7.1 and head for 7.0.
Short
by CityIndex
CNY! Happy Chinese New Year! PEPPERSTONE:USDCNH Oh, I cannot contain my excitement for this year's Chinese New Year of "Dragon"! 🐉 I mean, who wouldn't be absolutely thrilled to experience the exact same joyous celebrations as last year? And guess what? The depreciation trend of CNY? Oh, it's not going to miraculously reverse itself, not a chance! It's almost as if the Chinese government's awe-inspiring market manipulation is gracefully reaching its magnificent climax. And of course, we can all look forward to those enchanting SWAP contracts being wrapped up right on schedule after Chinese New Year. It has become such a charmingly predictable tradition, hasn't it? Like clockwork, year after year. 🙃 Now, if I gaze into my mystical crystal ball, I foresee a breathtaking future for the Chinese New Year. In the short term, hold onto your hats as the price pirouettes within the thrilling range of 7.21 and 7.17. 🧐 But wait, there's more! In the mid term, it will be up to 7.36, the peak in last year. Long term, prepare yourselves for a heart-stopping ascent to the dizzying heights of 7.78 to 7.81.🧐 Of course, we couldn't possibly fathom it going any higher than that. Why, you ask? Well, it's an absolute enigma why the mother country would ever contemplate lowering the rate of the son, especially when the HKDUSD stands at a jaw-dropping 7.8. It's like an intricate puzzle wrapped in a perplexing riddle, don't you think? 🤭 Yes, the macroeconomic world is teetering on the edge of its seat, eagerly awaiting the news that will come to the rescue of the oh-so-precious property market! I mean, what else could possibly save the day? Whispers and rumors abound about lower interest rates, an astonishing metamorphosis of the 5% public housing policies into a mind-boggling 30%, and let's not forget the grand abolishment of Xi's policy, "house is for living but not for making money". 🤭 Oh, but that's not all! Hold onto your hats as only newly planned developments are bestowed the privilege of borrowing money. Isn't it just splendid? But wait, there's more excitement brewing! Brace yourselves as the government magnanimously increases their securing guarantee for property lending. 🍒 Can you even begin to fathom the magnitude of this? We're talking trillions upon trillions of USD equivalent CNY being injected into the market. It's like a magical elixir that will undoubtedly solve all the property market woes. What could possibly go wrong under Xi's visionary policy? 😛 Ladies and gentlemen, get ready for a spectacular show this year. It's going to be one for the books! What are we waiting for? Wish all luck with you. HAPPY LUNAR NEW YEAR! 😛
Long
by RedCranePunch
Yuan Retreats from Multi-year Highs on Strong Economic Data The US dollar index hit its highest level since early March this week, but the yuan is one of the few currencies to rise against the USD over the period. This was facilitated, among other things, by strong economic data published today: → Industrial production growth in August amounted to +4.5% in annual terms (expected +3.9). This is the strongest progress in 1 month since autumn 2022. → Retail sales in August increased by 4.6% year on year (expected +3.0%). The chart shows that after a multi-year high (B) of about USD 7.36 per yuan set on September 8, the rate has retreated sharply. That is, sales of dollars (B→C) for yuan increased. And the sharp increase in A→B is completely leveled out. This is a bearish sign, indicating that the bulls have completely retreated. Now the price is near the median line of the channel. Here one can expect support, which is also strengthened by the level of 7.275, which previously served as resistance. Let’s say that if a rebound C→D occurs (its probability is indicated by the long lower shadows on the candles on September 14-15), then by its dynamics it will be possible to judge the sustainability of the initiative that the bears have taken. If the rebound is 50% of the momentum (B→C), this will confirm the change in sentiment to bearish, and then we can expect that sellers will be able to put pressure on the rate so that it will decline to the lower border of the channel. And then the picture will be even more bearish, because a head-and-shoulders pattern will form on the chart along the 0-B-D vertices. Provided the positive news background regarding the Chinese economy continues, we will be able to witness the formation of a stable bearish trend in favor of the yuan. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
USD/CNH looks set for its next leg higherUSD/CNH remains in a soliud uptrend on the daily chart and, after consolidating around the June highs and forming a bullish hammer at 7.25, the swing low appears to be in. A bullish range expansion day broke the bearish resistance line, and bulls could seek to enter upon any pullbacks towards yesterday’s low for a tigher long entry. The bias remians bullish above Last weej’s hammer low, and we could now be heade for 7.35 or the 2022 high. A small bulish hammer has also formed on the 1-hour chart. A conservative target projected from the recent leg higher suggests 7.32 for bulls, whilst if we use the run up from 7.27 it projects a target atound 7.34.
Long
by CityIndex
USD/CNH Extends Gains Amid Firmer US Dollar and Geopolitical...USD/CNH Extends Gains Amid Firmer US Dollar and Geopolitical Tensions The USD/CNH currency pair has been making significant strides, extending its gains for the fifth consecutive day during the Asian session on Friday. Trading around 7.3530, the pair is now approaching the resistance confluence at 7.3590. Simultaneously, the onshore Yuan (CNY) has reached a 16-year high at 7.3462 against the US Dollar (USD). These developments underscore the current strength of the USD, which has been bolstered by a consistent stream of positive economic data from the United States. Firm USD Supported by Upbeat Economic Data The recent performance of the USD can be largely attributed to the string of encouraging economic indicators emerging from the US. Notably, on Thursday, the release of data revealed that as of September 1, Initial Jobless Claims in the US had decreased to 216,000, a notable drop from the previous figure of 229,000. These numbers defied market expectations, which had anticipated an increase to 234,000. Furthermore, US Unit Labor Costs for the second quarter (Q2) surged to 2.2%, up from the previous reading of 1.6%, contrary to the expectation that they would remain unchanged. These impressive economic figures have lent support to the USD, instilling confidence among investors and traders. As a result, the USD has continued to gain strength, influencing its performance against various other currencies, including the Chinese Yuan. Geopolitical Tensions in Focus In addition to the currency market dynamics, geopolitical developments are also impacting the USD/CNH pair. The upcoming G20 leaders' summit in New Delhi, scheduled to commence this Saturday, has garnered significant attention. US President Joe Biden is set to participate in the event, but notably absent from the guest list is Chinese President Xi Jinping. Xi Jinping's decision not to attend the summit raises questions about the state of US-China relations. The absence of both leaders at a crucial global forum signifies the persisting strain in their bilateral relationship. It's worth noting that this comes amid ongoing tensions surrounding issues like trade, technology, and human rights, further complicating diplomatic efforts between the two superpowers. The exclusion of China's top leadership from the summit may contribute to the prevailing geopolitical uncertainty, and the market will closely monitor any developments that could impact the global economic landscape. Conclusion The USD/CNH's recent winning streak, driven by a stronger US Dollar and reinforced by positive economic data, highlights the ongoing shifts in the currency market. As the pair approaches key resistance levels, traders and investors will closely watch for potential breakout opportunities. Simultaneously, the geopolitical backdrop, marked by the absence of President Xi Jinping at the G20 summit, adds an extra layer of complexity to the situation, underscoring the intricacies of global diplomacy and their potential influence on currency markets. Our preference The upside prevails as long as 7.26750 ( 78.6% Fibo ) is support.
Long
by FOREXN1
8
Chinese Yuan Falls to Year's Low Why is the yuan falling? → Strong US dollar. Yesterday it became known that the number of applications for unemployment benefits in the US amounted to 216k for the week — below the forecast of 232k applications. This is the lowest level since February. → Worsening problems in the Chinese economy. Yesterday's data from the General Administration of Customs of the People's Republic of China showed that the volume of exports in August decreased by 8.8% in annual terms — the decline in exports is recorded for the fourth month in a row. As the chart shows, the USD/CNH rate reached 7.36 today. According to some sources, this is not only the minimum for the yuan for 2023, but also the minimum for 16 years (it depends on whether the 2022 low is considered broken). Bullish arguments: → The price is within the ascending channel. The dynamics develop in its upper part, which indicates the strength of the trend. → The price fell below 7.27 only for 1 day, forming a candle with a long lower shadow. The recovery occurred quickly, indicating the strength of demand. → The size of the B-C retracement corresponds to the size of 50% of the A-B impulse. This is the proportion for a normal correction within a stable trend. → 3 candles on September 5-7 can be classified as a bullish 3 White Soldiers pattern. Statistically, after the formation of the pattern, we should expect continued growth. Bearish arguments: → If the trend continues, the rate may reach the upper boundary of the upper channel. There, the bulls can take profits, which will weaken the trend. → The FT reports the words of Ken Cheng, chief FX strategist for Asia at Mizuho Bank: “there is a growing likelihood that the People's Bank of China will adjust the currency band.” That is, as in the case of the yen, one should be prepared for government intervention in order to protect the currency. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
AUDUSD - a slave to Chinese markets We saw a lot of confusion in the headlines as to the weakness in AUDUSD yesterday. The RBA meeting had very little to do with it, and the AUD has just been a proxy of Chinese markets. A higher USDCNH and weaker HK50 saw AUD lower, and a simple overlap will highlight this. Weaker China Caixin services PMI data was behind this, so as we look ahead at China trade data (tomorrow – no set time), international funds continue to use the AUD as a liquid and cost-effective vehicle for trading the yuan. After a big move lower on the session yesterday, we are seeing modest follow-through selling in AUDUSD today – not influenced by Aus Q2 GDP (which was modestly hotter), but USDCNH pushing higher. Favour this pair further lower, although if China property stocks do reverse higher here, I’d reverse as a day trade and follow the tape.
Short
by Pepperstone
1
USD/CNH Falls Amid Chinese Economic Stimulus Since January, the Chinese yuan has weakened more than 9% against the US dollar due to problems in the Chinese economy, as evidenced by statistics, as well as the bankruptcy of the developer Evergrande. And today, the People's Bank of China announced that it will reduce the required foreign exchange reserve ratio to 4% from 6%, starting September 15. The move is seen as aimed at slowing down the yuan's fall. Also, 5 major banks in China are cutting mortgage rates, possibly to reduce the risks of Country Garden going bankrupt. According to analysts reported by Reuters, the measures taken may be only a temporary solution, but will lead to an increase in problems in the long term. The chart shows that the USD/CNH rate has declined from the highs of April by approximately 1.4%, while: → the price of the US dollar against the yuan is in an uptrend and its median and bottom line can provide support; → the rate has support from the level of 7.24, which previously worked as a resistance; → the fact that on the first day of September the rate is below the lows of August may be due to the weakening of the US dollar index due to negative trends in the US labor market. It is possible that the level of 7.24 will become a reliable base for the bulls, from which they will try to resume the main uptrend if the incentives from the Chinese authorities are not enough. Note that the last time the US dollar traded for 7.4 yuan was in 2007. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
Macro Economics- BRICS Oil Nations, GDPHi Traders, Investors and Speculators of Charts 📈💰 The 15th BRICS summit was held in South Africa from August 22-24, 2023. There have been some important updates that concluded from this summit and if you're an active trader / speculator in the Forex, stocks or commodities market, you NEED to know about this. The BRICS countries (Brazil, Russia, India, China, and South Africa) now control 30% of the entire global economy. This is up from 17% in 2000 and 23% in 2010 . The BRICS countries are also home to 42% of the world's population. Incase you missed the previous article, find it here: BRICS Total GDP With New Members: B razil: $2.08 trillion R ussia: $2.06 trillion I ndia: $3.74 trillion C hina: $19.37 trillion S outh Africa: $399 billion Saudi Arabia: $1.06 trillion Argentina: $641 billion UAE: $499 billion Egypt: $387 billion Iran: $367 billion Ethiopia: $156 billion BRICS will now control 30% of the global economy. If you're invested in any BRICS related stocks or Forex markets, this concerns you! The summit outcomes are expected to lead to a weaker US dollar in the near term. This means that currencies against the dollar will strengthen. This is because the BRICS countries are collectively a major source of demand for commodities, such as oil and gold. The outcomes of this summit lead to proposed increased investment in the BRICS economies. This could lead to higher demand for commodities, which would put upward pressure on commodity prices and the value of currencies of commodity-exporting countries, such as the Brazilian real and the Russian ruble. This would make the US dollar less attractive to investors, which could lead to a weaker dollar. _______________________ 📢 Show us some LOVE 🧡 Follow for daily updates and trade ideas on Crypto , Stocks , Forex and Commodities 💎 We thank you for your support ! CryptoCheck
Short
by CryptoCheck-
19
Forex & Stocks: Capitalize on BRICS2023Hi Traders, Investors and Speculators of Charts 📈💰 The 15th BRICS summit is being held in South Africa from August 22-24, 2023 and will undoubtedly affect the Forex market. The main reason for this, is the commonly know agenda of BRICS to implement a new reserve currency instead of the USD. More details on that topic here: The 5 Forex markets we'll consider are: FX_IDC:USDINR FX:USDCNH FX_IDC:USDRUB FX_IDC:USDBRL FX:USDZAR As we can clearly see from the charts, from a Cycle / Phase analysis, it is dire time for the USD to correct as we see top outs in basically all of the charts Don't be surprised if it goes UP first, then down (sell the news but in reverse for the BRICS currencies). The summit is being hosted by South Africa, which is the current chair of BRICS. The other members of BRICS are Brazil, Russia, India, and China. The summit is expected to focus on the war in Ukraine, the global economy, and the expansion of BRICS. The theme of the summit is "BRICS and Africa: Intra-BRICS cooperation for sustainable development in Africa". Russia's President Vladimir Putin is not attending the summit in person due to the international arrest warrant issued against him for alleged war crimes in Ukraine. He is being represented by Foreign Minister Sergei Lavrov. The summit is expected to boost investor confidence in the BRICS economies. This is because the summit will provide an opportunity for the BRICS leaders to discuss ways to strengthen their economic cooperation and coordination. This could lead to increased investment in the BRICS economies, which would boost their growth prospects. Top Stocks to consider are: 1. Petrobras (PBR) is the largest oil and gas company in Brazil. NYSE:PBR 2. Sberbank (SBER) is the largest bank in Russia. MOEX:SBER 3. State Bank of India (SBI) is the largest bank in India. BSE:SBIN 4. China Mobile (CHL) is the largest mobile phone company in China. MIL:CHL 5. Tencent (TCEHY) is a Chinese multinational technology conglomerate. OTC:TCEHY 6. Alibaba (BABA) is a Chinese multinational technology conglomerate. NYSE:BABA 7. Vale (VALE) is a Brazilian multinational mining company. NYSE:VALE 8. PetroChina (PTR) is the largest oil and gas company in China. SSE:601857 9. ONGC (ONGC) is the largest oil and gas company in India. NSE:ONGC 10. Infosys (INFY) is an Indian multinational information technology company. NSE:INFY The summit is also expected to lead to a weaker US dollar. This means that the other currencies against the dollar as listed on the 4 charts will strengthen. This is because the BRICS countries are collectively a major source of demand for commodities, such as oil and gold. If the summit leads to increased investment in the BRICS economies, it could lead to higher demand for commodities, which would put upward pressure on commodity prices and the value of currencies of commodity-exporting countries, such as the Brazilian real and the Russian ruble. This would make the US dollar less attractive to investors, which could lead to a weaker dollar. A great way to capitalize on the outcome of BRCIS 2023, is to anticipate and keep an eye out on markets that will potentially be positively affected by this summit. _______________________ 📢 Show us some LOVE 🧡 Follow for daily updates and trade ideas on Crypto , Stocks , Forex and Commodities 💎 We thank you for your support ! CryptoCheck
Short
by CryptoCheck-
44
USDCNH - Testing new highsThe trajectory of the USDCNH is a burning question as it approaches the highs witnessed in November 2022. Recent weeks have seen China's economic robustness wane, and as a result, attempts by its central bank to ease the situation have led to a weakening of the CNH. This dynamic becomes clearer when considering the interest rate differential between China and other nations. In contrast to the U.S., which is on a rate-hiking journey, China's recent interest rate reductions have amplified the rate gap between the two nations. Overlaying the USDCNH currency pair with this interest rate differential reveals a clear correlation: as the differential grows, the USDCNH rises in tandem, driven by the depreciating CNH against the USD. A possible factor behind this movement is the "carry trade", where investors borrow in CNH at low-interest rates to invest in higher-yielding assets. This phenomenon isn't unique to the USDCNH. Japan, another country that has adopted an easing stance, exhibits similar patterns. As the rate differential between the U.S. and Japan expands, so does the USDJPY currency pair. Examining the dollar independently, there's potential for an upward surge. It's currently trading close to the top edge of a descending channel, with the RSI indicating it isn't oversold yet. With the Jackson Hole Symposium slated for later this week, all eyes and ears will be sensitive to any unexpectedly hawkish remarks from the Federal Reserve Chair, which could lead to another surge in the dollar, driving the USDCNH higher. On the one hand, the dollar has the potential to break higher based on technical, on the other hand, the PBOC is likely to ease policy further as it deals with the economic fallout of its property sector. Considering the above in an eventful week when the Jackson Hole Symposium is to be held, we see opportunity for a risk managed long position in the USDCNH at the current level of 7.3126 with a tight stop at 7.245 and take profit at 7.460. Each 0.0001 per USD increment in the USDCNH future is equal to 10 CNH. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com
CME:CNH1!Long
by inspirante
USD/CNH - LONG; China is dead!... and it is about to roll over. E.g. Sell it ALL!! This is the year (2023) to start the Long March (a familiar theme in Chinese history), to gain full stride, right into oblivion. Namely, the Chinese demographic implosion which has been gathering speed for quite a while now, will hit that country with undeniable force, essentially halving the population in less than the next decade and a half. This pretty much sums it up. (Why do you think they had the severe "Covid lock-downs", lasting for 3 years by now?! ...) Whether China will go down swinging is yet to be seen however, the outcome is a foregone conclusion, in any case. (Short of some oracle which could create 800 million Chinese, overnight, all between the ages of 21-35. China's current "R Factor" - reproductive rate - is half that of Covid and its varieties. - Just to illustrate the point.) The technical picture of this pair speaks for itself, as well, the pair landing/turning on massive support here. (Beijing couldn't allow the further appreciation of the Yuan without crushing an already imploding economy!) As for the monetary picture; China's >600% credit expansion in barely a decade is abjectly absurd, even by the recent, excessively loose global monetary standards. p.s. China had never had more than 70 consecutive expansion - or even stable - years in its 4000 year, illustrious history. The time has come, once again, with a well defined end in sight.
Long
by Nemo_Confidat
12
A Traders’ Playbook – backing a horse called Dollar The USD reigned supreme in G10 FX last week, and unless we see a far better feel towards China this week then I see the probability skewed for further USD gains. USDCNH remains central to the positive USD bias, and despite the best efforts of the PBoC to push back on the yuan weakness the daily chart is a thing of beauty – perhaps the better way to think about price is to question how high USDCNH would be if the PBoC hadn’t been ‘fixing’ the yuan at stronger levels each day, and Chinese state banks weren’t selling USDs. With the China proxies in the doghouse, we see NZD and AUD finding few friends, although we may see a few lightening up on shorts into the RBNZ meeting. I stay biased long EURAUD, although understand sentiment towards China is shot to pieces -this week's high-frequency China data may only need a small beat to cause a strong upside reaction in China proxies. USDJPY eyes a retest of the 145.07 highs and the manner by which US Treasuries are trading, both on a nominal and real basis, it's hard to fade the upside in USDJPY, although we may run into JPY intervention headlines this coming week. With a focus on bond markets, it's hard to go past moves in the UK bond market, where the 10yr gilt is above 4.5% and eyeing recent highs of 4.71%. We see 2- and 5-year UK gilt yields moving higher vs US Treasuries, and this is offering some support to the GBP. We continue to watch this dynamic with UK wages and CPI due this week. The preference remains to cast the net towards the crosses, where GBPAUD, GBPNZD or GBPJPY have been solid plays and will need to big downside UK core CPI print to halt the bullish trends. With China joining the UK as a central focus this week, we see big underperformance in the HK50, CHINAH and CN50. With China new yuan loans printing a 14-year low last week and renewed concerns on property developers, the Chinese authorities need to get in front of economics and sentiment. The market wants bold action, and anything less will attract sellers. I like the CHINAH index into 6200, but realise sentiment is shot and we also have Tencent reporting this week. Elsewhere, given views on US real rates, the USD as well as the general flow, I stay negative on gold and silver, but see modest upside risks in energy. We watch price action in broad large-cap tech and the A.I plays where we’re seeing dicey moves and real vulnerability emerge, and this could be a big theme that has to be on all trader's radars. The mega-cap tech/AI trade is one crowded position that if even modestly unwound could have big ramifications for risk. The 50-day MA on the US500 (4448) needs to hold this week, and a close below this average may hold big implications for market structure. While monthly options expiry could be price action, we watch to see if we see a move higher in volatility and our trading environment. The Risk Manager; navigating the marquee data/central bank meetings • China high-frequency economic data (all due 15 Aug 12:00 AEST) – After the recent weak trade and credit data, and a big push higher in USDCNH, we watch the monthly high-frequency economic data. Here, the market looks for industrial production to grow at 4.3% YoY, retail sales at 4.2% YoY and fixed asset investment at 3.8% YoY. The market is craving stimulus on both a fiscal level, backed by new monetary policy easing. Will bad economic data result in upside for Chinese equities, as it accelerates the need for stimulus? I am not so sure, but the cleaner trade remains USDCNH upside, where weakness in the yuan should in turn weigh on the AUD. • Australia Q2 Wage Price Index (15 Aug 11:30 AEST) – the market looks for wages to grow at 0.9% QoQ, and 3.7% YoY (unchanged from Q1) – unless we get a YoY WPI print above 4% YoY, the data shouldn’t alter Aussie rates pricing to intently where the market prices 15bp (or a 59% chance) of hikes by December. • UK employment and weekly earnings (ex-bonus) report (15 Aug 16:00 AEST) – the market expects wages to push to 7.4% (from 7.3%), with the UK unemployment rate eyed at 4%. The GBP was a relative outperformer last week in G10 FX, notably vs JPY and NZD – so GBP longs will look for big wage print this week, which would confirm expectations of a 25bp hike from the BoE on 21 September and lift peak rate expectations towards 6%. • US retail sales (15 Aug 22:30 AEST) - the market looks for sales to grow 0.4% with the ‘control group’, the basket of sales that feeds more directly into the Q3 GDP calculation, eyed at 0.5%. • Canada CPI inflation (15 Aug 22:30 AEST) – the market prices 5bp of hikes for the next BoC meeting (6 Sep), so the CPI report could alter that pricing resulting in increased CAD volatility. Here, the market sees headline CPI coming in at 3% YoY (from 2.8%) or 0.3% MoM. Core CPI is eyed at 3.7% (3.9 yoy). It may take a 4-handle on core CPI to see the September meeting as a ‘live’ event. • China new home prices (16 Aug 11:30) – with the Chinese property market in focus, as well as property developers and if we are to see a credit event, new home sales could get the headlines and move Chinese assets. • RBNZ meeting (16 Aug 12:00 AEST) – the market is firmly of the view that RBNZ keep rates unchanged at 5.5%, and we see only 6bp of hikes priced for the remainder of 2023. It seems unlikely the NZD will move too intently on the RBNZ statement and may revert quickly to following moves in the yuan and China equity markets. • UK July CPI (16 Aug 16:00 AEST) – coming after last week’s hotter UK Q2 GDP print, and Tuesday’s UK labour report, the market expects headlines inflation to drop to 6.8% YoY (from 7.9%). However, core CPI is likely to remain frustrating sticky also at 6.8% (from 6.9%). Unless core inflation falls markedly, then a 25bp hike in Sept is all but assured. • July FOMC meeting minutes (17 Aug 04:00 AEST) – the Fed have moved to a firm data-dependent approach, so the minutes may not offer any surprising insights. The market is waiting for new data, where they can potentially revisit low expectations of a hike in the November FOMC meeting, which is currently priced at a 33% chance. • Australia July employment report (17 Aug 11:30 AEST) – the usual monthly labour market lottery – the consensus is we see 15k net jobs being added, with the unemployment rate eyed at 3.6% - again, it’s hard to see the data altering rate expectations too intently and unless we get a big beat/miss shouldn’t see any lasting move in the AUD. On the day, I would be fading extreme moves intraday through buy/sell limit orders in AUD. • Norges central bank meeting (17 Aug 18:00 AEST) – The Norwegian central bank should almost certainly hike by 25bp to 4%. The NOK takes its cues from energy markets, although the 20-day rolling correlation between Brent crude and the NOK is not overly impressive at 56%. The NOK was the weakest G10 currency last week, so unless we get a great surprise from the Norges Bank, we should see the NOK revert to watching crude, Nat Gas and being a high beta risk proxy. • Japan July CPI (18 Aug 09:30 AEST) – with the market establishing JPY shorts as the preferred funding currency for carry exposures, we question if the JP national CPI print really matters given the JPY’s lack of cyclical qualities. We shall see, but the market looks for headline CPI at 3.3% and core at 4.3% (4.2%). With USDJPY eyeing a retest of the 30 June highs of 145.07, and the trade-weighted JPY breaking to new lows, the market may be looking out more intently for JPY intervention headlines. Stocks to watch; earnings front of mind: • HK – Tencent (report on 16 Aug) – with a market cap of HK$3.21t, Tencent has easily the biggest weight and influence on the HK50. The implied move for earnings is 2.7%, so it could get lively. • US – we get the retail names due this week with Home Depot (15 Aug), Target (16 Aug), and Walmart (17 Aug) offering insights into consumer trends. • Australia – 52 ASX200 companies report numbers this week – including, JBH (14 Aug), CSL (15 Aug), COH (15 Aug)
PEPPERSTONE:US500
by Pepperstone
AUD breakout traders – look to the yuan for inspirationAs is typically the way in FX trading the breakout traders see a set-up on the higher timeframes and either the market uses these levels to fade the move, or the breakout fails to gain traction and ultimately reverses. Those seasoned traders who use breakouts for trade entry – often momentum and trend-followers – know the percentage of breakouts that lead to trending conditions is typically low. It is why they target ‘outlier’ moves within a distribution and subscribe to the view that the win/loss ratio is not a major concern. The strategy will typically run win rates of 30-40% but will focus more on the reward-to-risk trade-off. Extracting as much profit from each trade is where they make their money and that is where the science of holding positions kicks in. We may end up with many small losing positions, but when we win it is ideally a 5 to 10R. Holding, as I say, is key and that is never easy – it is why having a rules-based strategy can pay dividends. When the market breaks out and goes on a run you must know when to hold and when to fold. Granted, FX markets have a higher propensity to revert to a mean than commodities or equity indices, but the AUD screams out as currently fitting this dynamic. Notably, EURAUD, AUDUSD, AUDCHF and GBPAUD screened on the breakout radar yesterday, but have since failed to follow through with the move. China is at the heart of the AUD recent moves. USDCNH has always been a strong guide for me on AUD flows, and while I have been of the view that weaker external demand needs a weaker currency – the PBoC is doing the utmost to push back on the yuan weakness, with consistently stronger yuan ‘fixings’ (seen each day at 11:15 AEST). As a driver, we’ve seen a slightly better China CPI print today at -0.3% and USDCNH has sold off, in turn, this has lifted the AUD. The statistical correlation between AUD and CNH has broken down of late, but for those trading AUDUSD or the AUD crosses through Asia, the influence of the yuan is still incredibly significant. Tactically, if we are to see an upside break of 7.2500 (in USDCNH) I’d have far higher conviction we’ll see a closing breakout in these AUD pairs. Patience is always our best friend in trading, especially when using leverage, as we need to nail our entries – so having the set-ups on the radar and waiting for the market flow to push a trade is prudent. One could say we’re at peak negative sentiment towards China, and next week’s China economic data (industrial production, retail sales, fixed asset investment) is likely to see a more pronounced positive reaction to a beat than a negative one to a miss. That is a risk to manage, but if the AUD kicks lower in these pairs it could be meaningful and certainly be welcomed by those that like to trade continuations.
Short
by Pepperstone