Trading a Yuan Revaluation
Daily Forex Fundamentals | Written by Investica | Apr 15 10 14:16 GMT |
Trading a Yuan Revaluation
Speculation over a Chinese yuan revaluation is liable to intensify over the next 24 hours as the Chinese authorities may make a move on Friday or during the weekend. <---PRAY THEY FINALLY DO IT!!!
Expectations over a move should provide some degree of support to the Japanese currency, especially with some rumours that there will also be a further tightening of Chinese Reserve requirements. Either of these events should trigger an initial yen advance against the Euro. The best strategy, therefore, looks to be to sell EUR/JPY above the 127.20 level, especially as there are also still important structural Euro vulnerabilities.
The dollar struggled to sustain gains following the stronger than expected US retail sales data on Wednesday and dipped to lows near 92.80 following the generally dovish remarks from Bernanke. There was still significant yen selling on rallies and the dollar edged back to the 93.25 area.
Risk appetite remained firm on Thursday with confidence boosted by robust Chinese GDP data which, in turn, also maintained optimism over the regional and global economies. With risk appetite firm, there were expectations of further carry-related outflows from Japan. The Euro pushed higher against the yen for the sixth successive day before hitting profit taking.
There will be further strong speculation over a Chinese currency revaluation within the next few days, especially after the robust GDP data and this should provide some degree of yen protection. The dollar was holding around 93.25 on Wednesday as demand for both currencies was generally weaker.
Daily Forex Fundamentals | Written by Investica | Apr 15 10 14:16 GMT |
Trading a Yuan Revaluation
Speculation over a Chinese yuan revaluation is liable to intensify over the next 24 hours as the Chinese authorities may make a move on Friday or during the weekend. <---PRAY THEY FINALLY DO IT!!!
Expectations over a move should provide some degree of support to the Japanese currency, especially with some rumours that there will also be a further tightening of Chinese Reserve requirements. Either of these events should trigger an initial yen advance against the Euro. The best strategy, therefore, looks to be to sell EUR/JPY above the 127.20 level, especially as there are also still important structural Euro vulnerabilities.
The dollar struggled to sustain gains following the stronger than expected US retail sales data on Wednesday and dipped to lows near 92.80 following the generally dovish remarks from Bernanke. There was still significant yen selling on rallies and the dollar edged back to the 93.25 area.
Risk appetite remained firm on Thursday with confidence boosted by robust Chinese GDP data which, in turn, also maintained optimism over the regional and global economies. With risk appetite firm, there were expectations of further carry-related outflows from Japan. The Euro pushed higher against the yen for the sixth successive day before hitting profit taking.
There will be further strong speculation over a Chinese currency revaluation within the next few days, especially after the robust GDP data and this should provide some degree of yen protection. The dollar was holding around 93.25 on Wednesday as demand for both currencies was generally weaker.
