Fate Of Chinese Yuan Lies In The Hands Of Washington
ING Economic and Financial Analysis | Aug 29, 2018 04:03AM ET
If Washington follows through with its threat of 25% tariffs on $200 billion of Chinese imports, we would expect another bout of yuan weakness despite the government's attempts to stabilise the currencyh3 CNY: The fate of the Chinese yuan lies in the hands of Washington not Beijing/h3
The People's Bank of China's reintroduction of the counter-cyclical factor in the daily yuan fixing is a subtle yet significant development in the dynamics for global markets. As we showed in a recent predicting GBP to depreciate during a period of heightened Brexit uncertainty would be like high fiving ourselves for carrying an umbrella when it’s raining outside. The real value is gauging how long the storm will last and when to be brave enough to resist it. For GBP, the time to weather the Brexit storm is approaching; EUR/GBP’s breakout above 0.90 has as much to do with fleeting EUR strength, as it has to do with a Brexit risk premium being priced in (the correlation breakdown between EUR/USD and GBP/USD is a telling sign of the markets’ Brexit fears). We think the pair around 0.91-0.92 would be reflecting a significant degree of no deal Brexit risks – and offers good value if one believes that a disorderly UK exit from the EU come March 2019 will, in fact, be avoided. We would prefer to fade this EUR/GBP breakout higher – as risk-reward would not favour chasing the marginal pricing in of no deal Brexit risks.
Content Disclaimer: The information in the publication is not an investment recommendation and it is not an investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
This publication has been prepared by ING solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. “For more from ING Think go here .”
Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.