27 Monday Jun 2016
Posted | June 27, 2016 3:24:04 | Economics
The Yuan is down about 1.57% in three days and approaches the lows at the beginning of the year.
This will raise already high trade tensions between the US and China.
Yuan Daily Chart
Yuan Weekly Chart
These moves do not at all look “orderly”.
The sinking Yuan (a US dollar buys more Yuan) stems from capital flight from China. Brexit did not help matters..
Mike “Mish” Shedlock
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
You know, I was telling-my wife about currency pair fluctuations yesterday. She started talking basic international economics and the value of the dollar and was proud of herself for learning it. Unfortunately, she was a dozen days late and a lot of dollars short. I had to correct her, reluctantly, because of her naive belief in textbook economics. The world doesn’t work like that anymore. A few percent change in a currency pair was a major incident a few years ago. Now it’s Monday … just wait until Thursday when another impossibility shows itself to be commonplace. Central banks and HFT control the financial markets. Economic theory belongs to the masses, who no longer are relevant in this context.
You corrected your WIFE??? How’d THAT work out for you?!
I was delicate. She decided the whole idea was a waste of time. To a large extent, she is correct, but I still hope someday the institutions will relent and give control back to the markets.
Hope springs eternal. Thanks for the reply.
Glad he is still alive to reply.
The USD is the senior currency-and on BREXIT day the dollar went way the hell up because they were dumping Pounds, Euros and everything to clear through dollars. DeutscheBank said there were no dollars to get on that day…and it’s nearly killed them.
Blaming China for this is ridiculous
Good afternoon Mish:
Vis a vis Brexit I’m wondering whether you think as I do that one of the unmentioned potential shoes left to drop are derivatives of one of the major asset classes that have been dislocated.
Interest rates have tanked, stocks have tanked and the currency of the UK has crashed while other currencies have strengthened.
Love to get your thoughts.
Mike
Michael Haltman, President
Hallmark Abstract Service LLC
Director, Heroes To Heroes Foundation
131 Jericho Turnpike, Suite 205
Jericho, New York 11753
516.741.4723
mhaltman@hallmarkabstractllc.com
Hi Michael
I think DB in trouble for numerous reasons. Germany stands more to lose from Brexit than any other country because of exports to UK. Yes, derivative a huge mess too.
FYI – Won’t this make the yuan yawn even lower?
European SUPERSTATE to be unveiled: EU nations ‘to be morphed into one’ post-Brexit
http://www.express.co.uk/news/politics/683739/EU-referendum-German-French-European-superstate-Brexit
China has been a disaster in the making … and devaluation ALWAYS in the cards (much more to come) courtesy of out of control debt creation.
And why I rolled my eyes every time an “expert” predicted the $US weakening.
King Dollar staging a comeback (not that he went very far) … DXY highest since March.
Yup.
You ain’t seen nothing yet as far as the Dollar rally is concerned.
It will be EPIC.
What do you mean please?
that’s USDCNH. The fixing yesterday pushed USDCNY to a new low and it fell all the way to 6.70.
Yuan Follows Dollar Down, But Not Up
The Chinese are devaluing along with USD, but decoupling from USD when DXY rallies.
Low 6.80s is the line in the sand for technical traders.
I have a chart showing the current DXY looks quite similar to the late 1990s, the timing is almost impeccable with peaks and valleys in the analog lining up 16-17 years later. Even if CNY doesn’t want to go lower, USD will take it there, and then once CNY goes, almost everything melts against USD.
Trouble Brewing? Soros Goes Short As USD Analog Predicts Dollar Spike