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CNY rise to influence euro and JPY

Posted by Marge Maresca on Sep 4, 2017 11:57:46 AM


CNY rise to influence Euro and JPY

As larger components of the trade-weighted basket, a steep rise in the Chinese yuan may weigh on euro and yen. China switched its focus from the dollar to a trade-weighted basket in December 2015 which influenced the euro and JPY. Both currencies found support during a period of extreme bearish expectations that were based upon ultra-easy ECB and BOJ polices. The yen has never traded lower than the 120.01-123.68 range of December 2015, while EUR/USD only had a brief drop below the 1.0523 low of that month. Traders were very short euro then, today they hold a large long so CNY's rise may have a notable impact. However, JPY traders hold a similar sized short yen position to that of 2015 so the impact may be less noticeable. But, no CNY rise has ever been maintained, and some have been larger, so if CNY's rally does impact, it may only be to offer better levels to buy yen and euro.

GBP/USD bulls brace for assault on 30-DMA
Cable bulls are gearing up for another assault on the 30-DMA, currently at 1.2982, a daily close above which will pave the way to the the 30-day upper Bolli band at 1.3212. The market managed to break above the 30-DMA last week but failed to register a daily close above in a setback for bulls. Fourteen-day momentum could potentially show a positive reading at the end of trading today which would reinforce the underlying upside potential. As things stand, the outlook is mixed mainly because trading persists close to but below the 30-DMA. Each day that bulls fail to close above the 30-DMA weakens the underlying structure and puts the downside back in play. Chart:


Topics: US FX Market Open


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