USD/CNY (CNY=X) Surprising Rate Decision

USD/CNY (CNY=X) Surprising Rate Decision

USD/CNY (CNY=X) Surprising Rate Decision

The unexpected move by the People’s Bank of China to maintain borrowing costs is a sign of confidence the yuan can withstand selling pressure, according to analysts.

The PBOC on Thursday kept yuan funding costs on hold even after its U.S. counterpart pushed dollar rates higher and forecast a faster pace of tightening, narrowing the interest premium against the greenback to test the officials’ comfort zone. The exchange rate is no longer the major concern for the Chinese central bank when it comes to monetary policy

It’s been a good year so far for the yuan, appreciating 1.8 percent against the dollar to become the world’s second-strongest Asian currency. Against a trade-weighted currency basket of peers, it’s trading near a two-year high as foreign investors’ appetite for Chinese sovereign bonds drive inflows and MSCI Inc.’s inclusion of domestic shares into its main indexes fuel northbound purchases through Hong Kong stock links.

The yuan rose 0.1 percent onshore to 6.39 yuan per dollar as of 3:16 p.m. in Shanghai, while it was little changed offshore. The one-month implied volatility of the currency onshore tumbled to the lowest this year.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 6.36.

The projected upper bound is: 6.44.

The projected lower bound is: 6.36.

The projected closing price is: 6.40.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 23 black candles for a net of 1 white candles.

Momentum Indicators

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 43.8985. This is not an overbought or oversold reading. The last signal was a buy 4 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 56.17. 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 buy 90 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 -71. This is not a topping or bottoming area. The last signal was a sell 8 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 sell 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX CNY= closed up 0.004 at 6.398. Volume was 122% above average (neutral) and Bollinger Bands were 38% narrower than normal.

Open High Low Close Volume___
6.395 6.401 6.389 6.398 4,410

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

Moving Averages: 10-period 50-period 200-period
Close: 6.40 6.35 6.46
Volatility: 3 4 5
Volume: 3,629 2,569 2,086

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 0.9% below 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 1 periods.

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