CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Is It Time to Start Watching USDCNH Again

Article By: ,  Head of Market Research
September 25, 2019 12:38 PM

Is It Time to Start Watching USD/CNH Again?

With traders’ attention jumping from the ECB’s “QE Infinity”, to the seizing up of the repo markets, to the Federal Reserve’s “hawkish cut”, to Parliament’s resumption, to fears about impeachment (and that’s just over the last two weeks!), developments on the US-China trade front have seemingly shifted onto the backburner. When it comes to global economic growth though, the ongoing US-Sino trade dispute may be the most important storyline to watch.

Today brought two new conflicting headlines to the fore. First, the US imposed new sanctions on five Chinese nationals and six entities for knowingly transferring oil from Iran in violation of US sanctions. Much like last year’s arrest of Huawei’s CFO in Canada, these geopolitical developments are ostensibly separate from the ongoing trade negotiations, but with the US seemingly focused on containing China’s influence in any way possible, the news still represents a negative sign for the prospects of a near-term deal.

Speaking of which, President Trump (perhaps in an effort to redirect attention from the scrutiny he’s receiving around a July call with the Ukrainian President) proclaimed that a trade deal with China could come “sooner than you think.” The President has shown a pattern of projecting optimism around trade any time the stock market stumbles, but these comments appear incongruent with his hawkish speech toward the country in yesterday’s UN meeting. In any event, the People’s Republic will be focused on celebrating its 70th anniversary next week, so any substantial talks will likely be on hold for the near term.

Turning our attention to USD/CNH, the US dollar continues to put in higher highs and higher lows against China’s currency. Though rates have eased off the early-September peak near 7.20, the pair has turned higher over the last week and is quietly trading back to its highest level in nearly three weeks above 7.13:

Source: TradingView, City Index

Rather than conducting deep technical analysis on a heavily-controlled currency, readers would be wise to note that the longer-term trend is still toward a weaker yuan, and that as long as USD/CNH remains above 7.00, the risk of further escalation in the ongoing trade war remains elevated.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website 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.

© City Index 2024