FX News: Trading China’s RMB

FX News: Trading China’s RMB

FX News: Trading China’s RMB

China’s RMB closed up 0.012 at 6.864. Volume was 42% below average (neutral) and Bollinger Bands were 68% narrower than normal.

Open High Low Close Volume___
6.852 6.871 6.852 6.864 1,230

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 6.87 6.90 6.74
Volatility: 3 5 4
Volume: 1,556 1,588 2,497

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX CNY= is currently 1.8% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of CNY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on CNY= and have had this outlook for the last 33 periods.

The Chinese central bank’s yuan outstanding for foreign exchange continued to decline in January, weighed on by capital outflow pressures.

The funds declined 208.8 billion yuan (around 30.5 billion U.S. dollars) in January month-on-month to 21.73 trillion yuan, data from the People’s Bank of China showed Friday.

It marked the 15th consecutive month of decline.

As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China’s trade surplus and foreign investment in the country, adding funds to the money market.

China’s forex reserves dipped to about 2.99 trillion U.S. dollars in January, down from about 3.01 trillion dollars in December 2016, data from the State Administration of Foreign Exchange showed last week.

FDI

The fast-growing and open China will remain a powerful magnet for foreign investment in spite of the temporary drop in foreign direct investment (FDI) last month over seasonal factors.

FDI inflow to the Chinese mainland dropped 9.2 percent year on year to 80.1 billion yuan (12 billion U.S. dollars) in January 2017, the Ministry of Commerce (MOC) said Thursday in a statement.

The figure was also lower than 81.42 billion yuan in December 2016.

MOC spokesperson Sun Jiwen said at a press conference that the year-on-year drop was mainly due to a high comparison base in the same month of 2016.

“Meanwhile, the Spring Festival holiday also led to the decline,” Sun said.

Spring Festival, the Lunar New Year holiday, was in January this year and February last year. Chinese people enjoy a seven-day holiday around the festival.

The drop does not represent any trend for FDI inflow in the full year, as China still boasts strong favorable conditions for attracting foreign investment in the medium-to-long run, Sun added.

China’s GDP grew 6.8 percent in the last quarter of 2016, higher than the 6.7 percent in the previous three quarters. Full-year growth was 6.7 percent, within the government target of between 6.5 and 7 percent.

Momentum

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 29.8598. This is not an overbought or oversold reading. The last signal was a buy 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 45.59. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 35 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -83. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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