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Yuan inclusion in SDR and impact on USD

  • #21
  • Oct 29, 2015 5:29am Oct 29, 2015 5:29am
Right ... and the only additional factor is that China is now using a managed float; they set parameters (2% of yesterday's trading price) as the max movement. It's part market forces and part managed. Plus the odd devaluation of course.
Monetary policy- interest rates and printing cash do make a massive difference but when govs change them, they allow the market to make the correction rather than using their own reserves.
Short version - I rig the currency rates, I've got to pay for it. I cut the interest rates, I let the market take it there for me.

Anyway, let's see how it plays out and return to this closer to the time. Trade well.
  • #22
  • Nov 4, 2015 4:52am Nov 4, 2015 4:52am
Keep on waiting...



BEIJING/SHANGHAI, Nov 4 (Reuters) - The International Monetary Fund's Beijing office told Reuters no date had been set for reviewing whether to include the Chinese yuan in its reserve currency basket, responding to a report in local media that the review would be delayed.
The Chinese government has set its sights on securing a place for the yuan in the basket alongside the U.S. dollar, the euro, the British pound and Japanese yen as part of its goal of raising the international profile of the currency.
China Business News, a respected domestic finance newspaper, said on its website that the IMF was pushing back its plan to make a decision from Nov. 4 to Nov. 30.
The IMF official in Beijing, however, said he did not know where that information could have come from....
  • #23
  • Dec 1, 2015 1:40am Dec 1, 2015 1:40am
By Greg Robb
Published November 30, 2015
MarketWatch Pulse

WASHINGTON – The International Monetary Fund voted Monday to include China's currency in the basket of currencies that make up the international agency's Special Drawing Rights (SDR). The decision is a victory for the Chinese government, which has pushed for the inclusion of the yuan in the basket, as it would confer de facto reserve status on the currency. Since the 1990s, the SDR has consisted of four currencies: the dollar, the euro, the British pound and the yen. In a press conference, IMF Managing Director Christine Lagarde said including the yuan in the basket was an important milestone for China's integration into the global economy. The new basket will launch on Oct. 1, 2016. The IMF said the yuan to have a 10.92% weighting in the basket.

Copyright 2015 MarketWatch, Inc.
No Highs? No Lows? Must be Bose!
  • #24
  • Dec 1, 2015 1:53am Dec 1, 2015 1:53am
Apparently, the world had been sucked into a swirl of insanity now that a single-party dictatorship where the internet is censored, GDPs are fueled primarily by housing bubble & infrastructure development, food scandals are prevalent, its state does not even adhere to its own constitution, has finally joined the capitalism premier currency club.

Kudos to you all.
No Highs? No Lows? Must be Bose!
  • #25
  • Edited 10:27am Dec 1, 2015 4:33am | Edited 10:27am
On the rational side, USD/CNH barely flinched on the news release, possibly caused by the entire world is focusing on this week's NFP and highly probable rate-hike, that or the basket inclusion won't initiate till later half of 2016.

It was quite intriguing however, despite nil movement on USD/CNH, USD/HKD had showed some puzzling reaction to the news at the same day, formed an one-minute 2500 points candle with a 2000 points wedge. Coincidence? Highly unlikely.

What sentiment could triggered a bull candle with long upper shadow within a few minutes?

First, USD/HKD is an exotic pair with quite the unfavorable spread to retailers, so there was no doubt that the mini-black swan was solely triggered by institutional behavior.
Second, bull candle indicated heavy buying till it hit the "invisible" upper boundary of USD/HKD when some counter-parties short it down.
Third, an essential question to ask as of this point is, was the buying activity insinuated a regular "buy as much USD as I can get" or an emergency "buy cover as much USD/HKD position as I can dump", in other words, was it a buy to profit or stop loss to stop the pain?
No Highs? No Lows? Must be Bose!
  • #26
  • Dec 1, 2015 8:51am Dec 1, 2015 8:51am
Good spot, it was 99.99% likely to be a govt intervention to protect the HKD floor, fourth time this year? thereabouts.

HKD is being used as a proxy for the yuan, so they acted ahead of any speculators. They did the same at the time of yuan devaluation, sold a shedload to move it away from the floor.

Bigger question is is this the crack that leads to a shifting of the floor for the HKD? Be a brave prediction given they've defended it for over a decade, but it is possible.

I could be waiting until my retirement for a good time to short, and there's no real indication of where nor when as it's so stage managed. but if it does fall, on the basis of previous moves, I'd be long again around 7.662 only breaking up from the bottom mind, not as a limit.
  • #27
  • Dec 1, 2015 10:52am Dec 1, 2015 10:52am
Quoting triphop
Good spot, it was 99.99% likely to be a govt intervention to protect the HKD floor, fourth time this year? thereabouts. HKD is being used as a proxy for the yuan, so they acted ahead of any speculators. They did the same at the time of yuan devaluation, sold a shedload to move it away from the floor. Bigger question is is this the crack that leads to a shifting of the floor for the HKD? Be a brave prediction given they've defended it for over a decade, but it is possible. I could be waiting until my retirement for a good time to short, and there's...
I'm right there with you on the HKD floor trade. With CHF peg got destroyed plus there were epic peg failures such as Pound/Mark, Baht/USD and so on, it's just a matter of time before HKD's doomsday arrives.

After spending quite some time tracking HKD as it goes, I think it is safe to say, HKD peg could be breached, as long as impending rate-hike or even non-rate-hike cause any black-swanish volatility uproar.

Still, trading outright is suicide as of this point, need a second leg to cover my behind.
No Highs? No Lows? Must be Bose!
  • #28
  • Dec 2, 2015 9:01am Dec 2, 2015 9:01am
Quoting Tardigrade
Apparently, the world had been sucked into a swirl of insanity now that a single-party dictatorship where the internet is censored, GDPs are fueled primarily by housing bubble & infrastructure development, food scandals are prevalent, its state does not even adhere to its own constitution,.....
Hmm...they say imitation is the sincerest form of flattery and that sure sounds a lot like the good old USA of the last hundred years to me!
Yeoman the "Tough Luck" Trader =p
  • #29
  • Dec 2, 2015 9:11am Dec 2, 2015 9:11am
Quoting Yeoman
{quote} Hmm...they say imitation is the sincerest form of flattery and that sure sounds a lot like the good old USA of the last hundred years to me!
this is gold
No Highs? No Lows? Must be Bose!
  • #30
  • Dec 2, 2015 9:23am Dec 2, 2015 9:23am
Quoting Tardigrade
On the rational side, USD/CNH barely flinched on the news release, possibly caused by the entire world is focusing on this week's NFP and highly probable rate-hike, that or the basket inclusion won't initiate till later half of 2016.
Remember that till the end of August any commentary you could find said 'no way they will get in'. September the switch was flipped and all the news started saying 'of course they should be included'. But none of it has ever been front and center headlines. The move is not intended to get any attention. It does have great significance however as the world's sociopaths continue to ramp up the escalation of ww3 from economic to shooting. The U.S. and it's dollar are about to take a serious hit.
Yeoman the "Tough Luck" Trader =p
  • #31
  • Last Post: Dec 2, 2015 9:31am Dec 2, 2015 9:31am
Quoting triphop
{quote} ..... That aside, the safest, easiest trade on announcement of inclusion is long GBPUSD. Yuan will increase globally from London as a centre (this is definite), which will strengthen GBP. USD may sell off, though a lot of this is already factored in. Also short EGBP for similar reasons, flow of euros to pounds.
The GBP/USD chart has certainly made plenty of room for a bullish turn.
Yeoman the "Tough Luck" Trader =p
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