0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.51% 🇯🇵JPY: 0.08% 🇨🇭CHF: 0.04% 🇳🇿NZD: 0.00% 🇪🇺EUR: -0.02% 🇨🇦CAD: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/k8vBqgtTyX
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/S9CEcBm5Qe https://t.co/Dl0XNLJ8FM
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.13% Wall Street: 0.10% US 500: -0.01% France 40: -0.39% FTSE 100: -1.16% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/hPEruv9ifF
  • It was quite telling that during the Q1 crash, no central bank with negative rates went deeper into negative territory https://t.co/8TFclrghkE
  • Nothing like a good old August melt-up in $USDTRY - Reminder, next Turkish Central Bank Rate Decision is scheduled for Aug 20th - Record high 7.26 https://t.co/yhyBZ3qZCJ
  • Gold Price Surge May Be Losing Steam, US Fiscal Stimulus Eyed - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2020/08/06/Gold-Price-Surge-May-Be-Losing-Steam-US-Fiscal-Stimulus-Eyed.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #XAUUSD #gold #stimulus https://t.co/fBBfTC9nvW
  • BoE Governor Bailey says negative rates are in the toolkit, but it is not in the current plan to use them $GBP
  • Emotions are often a key driving force behind #FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here:https://t.co/eILWbFgHRE https://t.co/CVJCHaxfJs
  • State banks need to "TRY" harder to curb this selling https://t.co/5uxrOsqf6t
  • 🇬🇧 Construction PMI (JUL) Actual: 58.1 Expected: 57 Previous: 55.3 https://www.dailyfx.com/economic-calendar#2020-08-06
USD/CNH: Watch Chinese Yuan, PBoC for US-China Trade War Gauge

USD/CNH: Watch Chinese Yuan, PBoC for US-China Trade War Gauge

2019-08-09 18:06:00
Rich Dvorak, Analyst
Share:

CHINESE YUAN, PBOC FIXING LIKELY TO SERVE AS US-CHINA TRADE WAR BAROMETER

  • Spot USDCNH is currently trading above 7.1000 and suggests that US-China trade war fears remain elevated
  • Further weakening in the Chinese Yuan by the People’s Bank of China (PBoC) could fan the flames of the recent flareup in trade tensions
  • New to forex trading? Check out this free Forex for Beginners educational guide covering all the basics you need to know

Trade war tensions between the United States and China are heating up again following the latest news that President Trump plans on raising additional tariffs on Chinese goods, which sunk stocks in the S&P 500 Index and risk assets alike. Selling pressure accelerated after China’s central bank – the PBoC – weakened the Chinese Yuan’s fixing against the US Dollar to its lowest level since the Great Financial Crisis.

USDCNH VS S&P 500 INDEX PRICE CHART: 4-HOUR TIME FRAME (JULY 07, 2019 TO AUGUST 09, 2019)

USDCNH vs S&P 500 Index Price Chart Correlation US China Trade War

Chart created with TradingView

Most recently, Trump said the US is “not ready to make a deal” with China on trade and has “no choice but to do what he’s doing” regarding his decision to hike tariffs further. In turn, it could be assumed that the White House will move forward with levying the planned tax on Chinese imports.

PBOC WEAKENING CNY TO OFFSET TRADE WAR ESCALATION FROM TRUMP TARIFFS

The PBoC has increasingly cut the Yuan’s fixing throughout the week in an apparent retaliation to Washington’s tariff threat. With USDCNH now above the “taboo” 7.0000 price level, which has previously been defended by the PBoC when tensions flared up in December 2016 and October 2018, the Chinese Yuan could be at risk of weakening much further against the US Dollar.

Consequently, markets find themselves weighing the impact of a prolonged conflict between the world’s two largest economies as US-China trade war progress deteriorates once more shortly after the Trump-Xi G20 Summit meeting which little substantive progress came out of. Also, lingering uncertainty surrounding the US-China trade war in addition to higher tariffs will likely result in further downward revisions to global GDP growth.

USDCNH PRICE CHART: 4-HOUR TIME FRAME (JULY 31, 2019 TO AUGUST 09, 2019)

Spot USDCNH Chinese Yuan Price PBoC

That said, it will be important for markets to watch the direction of the Chinese Yuan for possible clues on US-China trade war progress and where risk assets head next. IG Client Sentiment data, which provides insight into retail traders’ bullish and bearish biases, could also shed light on market price action.

Spot USDCNH is currently trading slightly above the 7.10 handle with a steep uptrend since its spike above 6.9500 on August 1.

Moreover, lingering trade war risk has set USDCNH implied volatility back on the rise and pushed the USDCNH 25 Delta 1-week risk reversal reading to 0.7250, which indicates heavy call option demand as traders position for possibly-sizable moves to the upside.

Judging by USDCNH 1-week implied volatility of 7.23%, however, spot prices are expected to fluctuate between 7.0289-7.1711 with a 68% statistical probability. Seeing that currency option traders are pricing spot USDCNH to remain comfortably above the 7.0 price level, market sentiment and risk assets are likely to stay subdued in the near-term.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.