Is US getting serious on the Chinese currency issue at last? In its semi annual report to congress about exchange rates, the Treasury stated having “serious concerns” regarding value of the Renminbi. Low value of of Chinese currency is seem as the reason behind huge foreign reserves accumulated by that country and trade imbalance with the rest of the world, not just US. Additional growth of those reserves could threaten any progress made to date to reduce future risks of repeating global financial crisis, like the one we are still in. Report comes short of naming Chinese position as “currency manipulation”, which could lead to trade sanctions. So, basically, it is the same report from 6 month ago, only slightly re-worded.
Most of the world would like to see China’s currency floating freely, not being pegged to dollar, as it is currently. Renminbi had been allowed to appreciate at a measured pace for some time, but since the crisis erupted in full, Chinese central bank put an end to it. See chart in the original post. I think they are creating serious problems for themselves. When they eventually let it move with less restrains, which is only a question of time, sudden appreciation of Yuan will create problems for their entire, export based economy. Looking back on this last year, they should have left policy of slow, moderate appreciation in place. They decided against it, to try to maintain pace of economic growth. Eventually this will correct itself, not without pain.
Just like trading can be, painful. I have been tracking intermediate term chart of GBP-JPY for what seems like forever, trying to have a trade using nothing but price action, or highs and lows. Entry point has been lowered few times, tracking the ever falling price. Finally, couple of days ago, my buy order was filled and the trade is under way.
In the end I was in at 144.65. Current stop for this trade is at 139.55, but hopefully will be moved higher as soon as new low is formed. Also, no objective is set and trade will held until it gets stopped out. This position is of a small size for me. It would be uncomfortable to sit through these large potential swings that should be expected here. For example, current trade has already reached almost 500 pips in gain, but trading it like this could still allow for turning it into a loss(potentially). So I already booked solid profits in other accounts, and this one will be kept until it gets resolved without farther intervention on my part other than adjusting the stops.
Week started by trading GBP-NZD and I finished it like that, only on a more optimistic note. First loosing trade was followed by a more successful one. I also mentioned in there additional entry if price gets above 2.1800. Yesterday this cross broke through and I was long at 2.1830, for 200 pips trade. British Pound has been moving like crazy last few days and made for very interesting week. I can only hope it stays volatile for the foreseeable future.
Have a great weekend.
Mike K.
You are right- this is great finish to a week. Pound has been very good to you. Have a nice weekend!
Pound was good to me? Yeah, I guess so.
I don’t understand why it went up if the pound is not that strong and
the kiwi is not that weak. I mean I thought with the dollar down and commodities up and with New Zealand being a commodity-based currency…
Fundamentally speaking I don’t get it.
That’s why it is difficult to trade short term fundamentals. Pound went up because that’s where the money was flowing. Now the tricky part is to decide if this is just a correction, or a more important reversal.
So it’s like stocks are now. Moves up have nothing to do with fundamentals but just “where the money was flowing.” I seem to recall you posting about this.
Long term fundamentals have not changed. It is possible some changes are happening under the surface, but nothing is visible yet. Charts are better to trade, me thinks.
So its like stocks where the true value of the company has nothing to do with the price of its stock? Like what sterling actually trades at is unrelated to how much momentum the GBP/? could provide on a good-news day, even if it were bogus?
Everybody, press, tv, was talking about the Pound falling straight to hell, so I short gbp-usd only to see it snap against for hundreds of pips. Awfull. You manage to to buy the Pound and have fun. Is it OK to send you an email?
Good work on Queen, as always. Are you heading to Majorca for you birthday or staying on the dark side of the pond?
Sorry to hear it Damian.
Alex, I’m staying home, at least not traveling far.
[…] behind the move aside, I liked it. My GBP-JPY trade, last mentioned in the Getting serious with China post made another solid move. Stop loss can be moved to above entry price, thus making sure this […]