USD/CNH holds above 7.00 as US-China trade spat shows no easing
Fawad Razaqzada August 7, 2019 2:42 PM
The most important topics right now are trade wars and the relentless rally in the bond markets as concerns grow over the health of the global economy. Those concerns were evidenced by three central banks across the Asia Pacific almost frantically cutting interest rates overnight. Central banks of New Zealand and India cut rates deeper than expected while in Thailand the rate cut was almost completely unexpected. The latest sign of an economic slowdown was provided by German data once again, as industrial production there slumped by 1.5% in June compared to a smaller decline of 0.5% expected.
While it is always a good idea to keep track of the changes in fundamental developments, there may be a simpler way of being on top of things right now: watch the USD/CNH volatility. The PBOC has again allowed the Yuan to trade near the key 7-per-dollar level. As there are no signs of US-China tensions easing anytime soon, rates could break further higher – and, in turn, cause more chaos elsewhere, such as the equity markets and commodity dollars.
From a technical point of view, for as long as rates hold above the breakout area of 6.98-7.00, the path of least resistance should remain to the upside. The next bullish objective would be the liquidity resting above this week’s high (also the YTD high) at 7.1400, with the 161.8% Fibonacci extension level coming at 7.1720.
Source: Trading View and FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.