- A Look at the Majors
- What to Take from September’s FOMC Meeting
- Why September Jobs Data will Likely Be Strong
- Market Reaction to FOMC Outcome
- Forex Watch
- Cable Beware - The US Fed Has Room To Be Hawkish
- USD/CAD – Big Sell-off, Little Sell-off?
- US Dollar Basket
- EUR/NOK - We’ll be Just Like Norway!
- Main Foreign Exchange Market Drivers
- EUR/AUD: An RBA Rate Cut to Usher Us Back to 1.54?
- GBP/USD – Because Everyone’s Talking About It…
- Fed Set Cautious Tone at June Meeting
- EUR/GBP: Old Lang Syne
- Dollar Consolidation may Continue until Jobs Data
- Don't Expect Bank of England to Wait, Easing may Begin Next Week
- GBP/CHF: All Else Aside
- Brexit Sends Shock Waves Through Global Capital Markets
- USD/MXN: Inseparable Economies
- AUD/USD: Irrational Numbers
- CHF/JPY: The World Turned Upside Down
- The Fed, The Yen and the Pound
- Markets Have to Adjust as Fed Alters Course
- EUR/HUF: Indirectly Speaking
- AUD/NZD: Eggs in Basket Effect
- Why did Draghi Need to Act Now?
- The Yuan, and China’s Growth Path to Internationalization
- US Interest Rate Hike:
- a Matter of When, not If
- Greece and the Eurozone: Scenario analysis
- Actions vs. Words
- Grexit Fears Back on the Agenda
- Psychology more Important than Data in the Week Ahead
- Interest Rate Strategy
- The Effect of Illiquidity
- EURUSD to Break a 50 Year Average
- Japan Overshadowed, but Important Developments
- The Euro: Its Beginning, Its End, and Its Future
- Market Implications of May’s UK General Election
- Six Key Issues for Investors
- Market Mistakes Balanced Fed for Dovish Fed
- Hike or no Hike
- Why the Euro Bear Market is Only Half Over
- ECB Bond Buying Program Accelerates Euro Losses
- Dollar Bulls Charge Ahead
- Dollar Rally Still in Early Days
- Swiss Surprise
- Dramatic Losses in Greek Bonds and Stocks
- Market Catches Breath after Yesterday's OPEC-Induced Moves
- Diverging Monetary Policy Supports Ongoing US Dollar Rally
- FX Markets Volatility Ahead of the Fed Meeting
- Dollar Bulls in the Driver Seat, but Consolidation Looms
- Greater China and the USD/CNY
- BOE Governor excites Sterling bulls
- Currency Wars and Big Moves
- Japan and a Weaker Yen
- Commodity Currencies Await Green Light from Beijing
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So where would we be seeing USD/CNY over the next few months?
With continued watching on market fundamentals of the USD/CNY, we continue to see expanded use of the currency with the following:
• Russia: Russian companies are exploring into shifting trade contract to RMB denominated ones for future dealings in China,
• LME: With the current commodity financing problems, the possibility of using the London Metal Exchange as an intermediary for transparency may be explored, and as such, it may speed up their implementation of using RMB as a settlement currency,
• PPP Purchasing Power Parity: China’s current PPP comparable to the US, is less than 5 times of the US.
With expansionary use of the currency in global trade and with the country’s continuing effort to build a stronger capitalist foundation, appreciation in the USD/CNY pair should be something gradual.
Now, understand that CFETS (China Foreign Exchange Trade System) announces the central parity rate for the major currencies against major currencies at 9.15am Singapore/Malaysia/Beijing time. It is important to note that the trading band on the spot market is within the 2% range; therefore, it will be good ranges to follow.
Let us look at some price charts.
Chart 5: USD/CNY Daily Chart
Based on the Daily chart of the USD/CNY (chart 5), the market seems to have completed a full 5-wave to the upside. Theoretically, if we use the Elliott Wave from here, this ABC correction on Chart 5 should see a test on support at USD/CNY 6.1800. To complete the entire test downwards, we should see a pivotal point at 6.1500 for any longer term strength on the CNY.
In my opinion, a trading range between 6.1500 to 6.2500 for 2014 seems like a reasonable outlook, as China continue to repair credit, attract new investments from FDIs and re-focus its domestic growth model.