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Chinese yuan (USD/CNY)

  • #21
  • Dec 31, 2006 2:49pm Dec 31, 2006 2:49pm

http://bloomberg.com/apps/news?pid=2...&refer=economy


Recently, fed was overseas in China for the Strategic Economic Dialogue where they pushed for higher yuan prices to narrow the trade gap, as they were way undervalued and believed to be manipulated by the chinese for trade advantages.

As a result, the chinese are implenting a policy to make purchasing overseas securities easier in order to reduce the value of the yuan. They also stated that "The People's Bank of China wants to slow the yuan's appreciation to prevent local exporters from losing their price advantage. "

Now, isn't the chinese action about decreasing the value of yuan exactly the opposite of what the fed suggested? Maybe the new policy of purchasing overseas securities will help the dollar/euro with more demand but overall, wouldn't the trade gap be wider?
  • #22
  • Edited 8:21pm Dec 31, 2006 7:39pm | Edited 8:21pm
You're right-the article definately indicates that the last thing the Chinese want is appreciation of their currency. By allowing more foreign investment, it sets up for the Euro and other currencies to appreciate vs. the Yuan. Not the $ though, as the .3% trade band is still in effect. Also, their citizens and businesses are not free to make US investments without gov't approval.

What is really happening is a price war between the Japanese and China for the Euro Zone/UK marketplace. With the recent devaluation of the Yen relative to those currencies, Japan has become more competitive with China for those export markets. China has seen this and is making an effort to devalue the Yuan relative to those currencies.

Japan is desparate to grow their economy as China is becoming a bigger and bigger player. Exports represent their best chance to do this. I believe that we will see further substantial devaluation of the Yen relative to the Euro and GBP. How much? The Yen is currently trading near a level against the GBP not seen since 1998. I think it could break thru this important resistance and if it does, a real floodgate could get opened.

I don't have time to post the charts now, but there's a nice channel on the 4hr for both the EUR/JPY and GBP/YPY. The way they're sitting in their respective channels and applying stochastics, it appears that going long in the GBP/JPY at this time would be the right thing to do, as it is sitting at the bottom of the trendline and stochastics have bottomed out...and you can trade it with a tight stop just below the trendline. If it should dip below the trend line I would close the position, then long it once it gets back into the trend. Be prepared to short it as it approaches the top of the trendline and stochastics top out.

The opposite appears to be true with the EUR/JPY, as it is near the top of the band and stochastics are topping out. Shorting here appears to be the thing to do, then long it as it approaches the bottom of the trendline and stochastics bottom out...
  • #23
  • Dec 31, 2006 10:40pm Dec 31, 2006 10:40pm
what's weird is that the last week of the year 22nd to 29th, both the USD/JPY and EUR/USD has been in an up channel.
  • #24
  • Jan 1, 2007 6:50pm Jan 1, 2007 6:50pm
Quoting NewstraderFX
You're right-the article definately indicates that the last thing the Chinese want is appreciation of their currency. By allowing more foreign investment, it sets up for the Euro and other currencies to appreciate vs. the Yuan. Not the $ though, as the .3% trade band is still in effect. Also, their citizens and businesses are not free to make US investments without gov't approval.

What is really happening is a price war between the Japanese and China for the Euro Zone/UK marketplace. With the recent devaluation of the Yen relative to those currencies, Japan has become more competitive with China for those export markets. China has seen this and is making an effort to devalue the Yuan relative to those currencies.

Japan is desparate to grow their economy as China is becoming a bigger and bigger player. Exports represent their best chance to do this. I believe that we will see further substantial devaluation of the Yen relative to the Euro and GBP. How much? The Yen is currently trading near a level against the GBP not seen since 1998. I think it could break thru this important resistance and if it does, a real floodgate could get opened.

I don't have time to post the charts now, but there's a nice channel on the 4hr for both the EUR/JPY and GBP/YPY. The way they're sitting in their respective channels and applying stochastics, it appears that going long in the GBP/JPY at this time would be the right thing to do, as it is sitting at the bottom of the trendline and stochastics have bottomed out...and you can trade it with a tight stop just below the trendline. If it should dip below the trend line I would close the position, then long it once it gets back into the trend. Be prepared to short it as it approaches the top of the trendline and stochastics top out.

The opposite appears to be true with the EUR/JPY, as it is near the top of the band and stochastics are topping out. Shorting here appears to be the thing to do, then long it as it approaches the bottom of the trendline and stochastics bottom out...
I guess the actions taken by the chinese did not really give a hoot to bernake's comments?
  • #25
  • Jul 28, 2007 7:27pm Jul 28, 2007 7:27pm
Does anyone know any fx firm offer Chinese Yuan (Renambi) trading?

I know OANDA, GCI trading offer USD/CNY pair. Anyone know others?

Thanks!
  • #26
  • Sep 10, 2007 7:48pm Sep 10, 2007 7:48pm
Does anyone ever trade this pair? It has a massive spread with my broker of 40 pips but looking at the daily charts it's long term short.
  • #27
  • Sep 10, 2007 7:56pm Sep 10, 2007 7:56pm
40 pips isnt bad on USD/CNY considering each pip only worths $1.33 USD on a standard lot.
Take a report.
  • #28
  • Sep 10, 2007 8:07pm Sep 10, 2007 8:07pm
Quoting Marrethiel
Does anyone ever trade this pair? It has a massive spread with my broker of 40 pips but looking at the daily charts it's long term short.
CNY is not freeely exchangeable, right? How do you trade this pair?
  • #29
  • Sep 10, 2007 11:33pm Sep 10, 2007 11:33pm
Quoting struggler
CNY is not freeely exchangeable, right? How do you trade this pair?
I don't know, maybe the price is fixed? My broker has this pair available and I did manage to put a market order on with my demo account.

It's a very odd looking 5 minute chart, with lots of angles compared to the smoother flowing main currencies.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: daily USDCNY.JPG Size: 222 KB
Click to Enlarge Name: 5min USDCNY.JPG Size: 203 KB
  • #30
  • Edited 12:49am Sep 11, 2007 12:48am | Edited 12:49am
The Chinese yuan/remimibi is not a free floating currency...yet. Those in the U.S. can hear any number of politicians especially Sen. Schumer D-NY calling for the Chinese to free float their currency.

How do you trade it? I've been trading the Yuan since the beginning of the summer basically you have to take a long term fundamental view of the Yuan versus the US$, looking at the currenct account and trade balances of both countries as well as the massive dollar reserve holdings of the Chinese. Looking at these factors the Yuan is fundamentally undervalued. Considering that it being undervalued helps the Chinese exporters and allows the U.S. consumer to continue to consume cheap goods from China then it may not be a rapid decline until the Chinese begin to unload their massive dollar and US Treasury Bond & Bill holdings.

Fundamentally though, the Yuan is a long term buy, if you can handle the negative carry.
Therefore what??
  • #31
  • Sep 11, 2007 1:01am Sep 11, 2007 1:01am
Thanks for the clarification!
  • #32
  • Oct 26, 2007 5:59pm Oct 26, 2007 5:59pm
Oanda lets me trade the usd/cny pair even though it is pretty much a regulated currency. If you hold a short position (which I did in demo) the negative interest offsets alot of the profits in pip gain. I tried this over a two week period, and I'll probably put it back on with out stop losses just to watch (demo only).

My questions are:
1/ If this currency is floated is it expected that their will be a sharp shortening of the pair?

2/ What could the Chinese and American governments do to smooth out this drop if it happened? The Chinese could buy big and slowly sell off maybe? They are supposed to already have huge reserves of USD could any country afford this?
  • #33
  • Oct 27, 2007 4:41am Oct 27, 2007 4:41am
Quoting Marrethiel
My questions are:
1/ If this currency is floated is it expected that their will be a sharp shortening of the pair?

2/ What could the Chinese and American governments do to smooth out this drop if it happened? The Chinese could buy big and slowly sell off maybe? They are supposed to already have huge reserves of USD could any country afford this?
Hmm....if that tells you anything, currently I can hardly imagine that Chinese currency(including Hong Kong dollar) will soon segue into free-floating exchange rates. Because Chinese government wants to keep the economy growing to avoid domestic political turmoil and maintain the communist dictatorship. Frankly, Chinese president Hu and Russian president Putin are genius for politics, I think.
In contrast with Communist China, I wished Japanese politicians could have refused to give ground to demands from foreign pressure....Though, it's literally just a dream now.
Attached Image (click to enlarge)
Click to Enlarge Name: WS000431.JPG Size: 63 KB
Peace and Happiness through Prosperity (by Konosuke Matsushita)
  • #34
  • Oct 27, 2007 4:56am Oct 27, 2007 4:56am
as long they are comunist i don't see them having an open market( including free floating exchange rates).
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #35
  • Oct 28, 2007 8:34pm Oct 28, 2007 8:34pm
Thanks for the feedback and the great graph.
  • #36
  • Jan 7, 2008 12:08am Jan 7, 2008 12:08am
Hi guys, is oanda the only place that allows usd/cny trading? are there any other brokers, ECN ways espically that allow it with leverage? thanks
  • #37
  • Jan 7, 2008 12:23am Jan 7, 2008 12:23am
This is one of those exotic pairs with a 25 pip spread... yikes.

Here is one broker..http://www.tradelandfx.com/currencies.htm
  • #38
  • Jan 7, 2008 12:50am Jan 7, 2008 12:50am
I trade USD/CNY on Oanda but the max leverage is 50:1
Therefore what??
  • #39
  • Jan 8, 2008 4:30am Jan 8, 2008 4:30am
Once one of the main exchanges starts trading it, then you will see more brokers offering it.
  • #40
  • Jan 8, 2008 5:35am Jan 8, 2008 5:35am
Quoting xxfunguyxx
Hi guys, is oanda the only place that allows usd/cny trading? are there any other brokers, ECN ways espically that allow it with leverage? thanks
you need a lot of leverage to trade it. Each pip is only worth $1.x on a standard. The PBoC sets the rate. Good thing is, you don't get much intra-day movement. And we all know where it is going.
Take a report.
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