Driven by the weakening of the US dollar and the rise of the domestic stock market, the exchange rate of the RMB against the US dollar has risen to its highest level since November last year.
In the onshore market, the yuan rose as much as 0.1% to 7.1447 against the US dollar before giving up its gains. So far this year, the yuan has appreciated by about 2%.
Before the military parade on September 3rd, the “Victory Day”, the market expected the stock market to keep rising, which supported investors’ sentiment and drove capital inflows, thus propping up the RMB exchange rate. Since Federal Reserve Chair Jerome Powell hinted at a possible rate cut as early as September at Jackson Hole last week, the US dollar has been falling.
Christopher Wong, an FX strategist at Oversea-Chinese Banking Corp. in Singapore, said: “We have also observed net foreign inflows into China over the past few weeks. These factors, along with the Federal Reserve’s imminent resumption of rate cuts, should continue to support the renminbi.”
On Monday, the People’s Bank of China raised the central parity rate of the yuan to its highest level in a single day since January, boosting the currency’s exchange rate. On Wednesday, the central bank raised the so-called central parity rate by 0.1% to 7.1108.
Analysts from Deutsche Bank, UBS Group and Toronto-Dominion Bank have raised their predictions for the exchange rate of the Chinese yuan against the US dollar to 7, citing their optimism about a possible trade deal between China and the United States.
Technical analysis:
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Gold: After breaking through 3385 overnight, it completed a pullback and reached the 2-week high of 3394. During the day, the price rose again and then fell back, currently returning to around 3380. Short-term momentum is still lacking, and there are many uncertainties in the market. It is recommended to pay attention to the buy signals after the low-sweep liquidity near 3365 and 3348 during the day. For detailed positions, please consult the plugin.
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Nasdaq: The signal we reminded in the blue area in our plugin yesterday for buying after a pullback following a momentum break was in line with expectations. After the price broke through 23,489, it pulled back and rose all the way to the 23,550 level. Today, we should pay attention to the choice of the new breakout direction after the consolidation and conduct operations in line with the trend. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The overnight price did not rebound in the green zone but after sweeping through the yellow zone, it completed a rally. The intraday price has been consolidating in a narrow range around 64. We suggest waiting and seeing for a day. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Key economic data and events to focus on today:
18:00 UK CBI Retail Sales Expectations Index for August
