The upwards move in the Yuan is going to give the impression that the Chinese economy is strong. This is imperially important to the continuation of the commodity rally, which by extension, is key to the overall strength of the market.
They’ve figured out how to jimmy the markets. At the centre of the early 2016 collapse was forex dislocations in China, which cast a wide cloud of doom over the global growth narrative, which then caused commodities and plunge and the rest is history.
The yuan climbed 0.20 percent to 6.4948 a dollar as of 10:46 a.m. in Shanghai, according to China Foreign Exchange Trade System prices. The offshore rate in Hong Kong climbed 0.13 percent to 6.4966. The People’s Bank of China raised its fixing, which restricts onshore moves to 2 percent on either side, by 0.34 percent to 6.4905.
“The fixing and yuan moves reflect euro strength and dollar weakness overnight, as well as Chinese officials’ anticipation for further strength in non-dollar major currencies,” said Christy Tan, head of markets strategy at National Australia Bank Ltd. in Hong Kong. “The new yuan index continued its downward drift after falling below 99 in early February, and this is in line with the authorities’ aim of keeping the currency stable but allow gradual weakness against the basket.”
Nasdaq futures are higher by 0.9% and German DAX futures are higher by 1%.
If you enjoy the content at iBankCoin, please follow us on Twitter
Token move. They’ve got to devalue to eventually save their economy.
Say what? The sole purpose of devaluation – a favorite tactic of authoritarian states – is to tax the people without passing any new tax laws.
The end purpose of Chinese currency devaluation is—jobs. Keeping exports cheap is a means to that end.
The “Chinese Dream” is having a 70 hour per week job, living in a crowded dorm, taking public transportation, and eating noodles and rice while playing video games.
http://www.nytimes.com/2016/03/11/business/dealbook/for-china-banks-swapping-stock-for-debt-is-a-stopgap-with-pitfalls.html
I like how this article starts out calling this a “new approach”. It is not. One is reminded of Nassim Taleb’s frequent references to a “debt to equity conversion”.
The tape is a dead man walking.
This is very close to the level that they started weakening in Feb., they don’t have to take it back down to Sept levels because they are now in the basket of currencies. I very doubt that the Euro will get stronger today like yesterday, so Yuan strength is toppy. Plus, bottomline, it hurts their exporters and with Steel Factories closing, who needs cheaper commodities, especially with the HUGE surplus they have already? Remember, there is more Copper in the China trading houses then LME.
Translation, I would expect a sell off of the AUD/USD vs the USD/CNH moving down to it’s recent sept lows. It’s at very strong support and China gets to keep it not too hot or too cold.
WE LIT
Translation, I win again.