China Macroeconomics & Academia

Christopher Balding

FX & Rates

China ended the trading week warning speculators against dealings in RMB. The statement lead the RMB to a turnaround from a 22 month low. For all the think pieces reading the RMB vs. dollar saga at the heart of them is the very basic question; is China devaluing the RMB? Our position has been for some time that the RMB is theoretically set by the value of the CFETS.

China ended the trading week warning speculators against dealings in RMB. The statement lead the RMB to a turnaround from a 22 month low. For all the think pieces reading the RMB vs. dollar saga at the heart of them is the very basic question; is China devaluing the RMB? Our position has been for some time that the RMB is theoretically set by the value of the CFETS.

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

The CNY has developed a steady downtrend.  While this is often discussed in the context of political relations between the US and China, it may just reflect the fundamental realities.  These include policy easing in China to offset credit tightening related to increased regulatory scrutiny on shadow-finance.  Risk metrics in the Eurozone have deteriorated further; including wider credit risk premiums for periphery sovereign and corporate bonds.  This appears to be contributing to a weaker EUR.  EUR/CHF may have room to fall after diverging from wider Italian bond spreads in the last month.  The rise in US real yields in the last two months appears to reflect, to a significant extent, a higher term premium.  This suggests that the Fed’s balance sheet unwind may be starting to have a bigger impact, both supporting the USD and dampening global equities.    The cost of hedging long EUR/USD positions over three-month terms is at a record high.

The CNY has developed a steady downtrend.  While this is often discussed in the context of political relations between the US and China, it may just reflect the fundamental realities.  These include policy easing in China to offset credit tightening related to increased regulatory scrutiny on shadow-finance.  Risk metrics in the Eurozone have deteriorated further; including wider credit risk premiums for periphery sovereign and corporate bonds.  This appears to be contributing to a weaker EUR.  EUR/CHF may have room to fall after diverging from wider Italian bond spreads in the last month.  The rise in US real yields in the last two months appears to reflect, to a significant extent, a higher term premium.  This suggests that the Fed’s balance sheet unwind may be starting to have a bigger impact, both supporting the USD and dampening global equities.    The cost of hedging long EUR/USD positions over three-month terms is at a record high.

ECB and Fed QE Reversal in Play, Credit Risk Dampening CNY and EUR

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Shanghai Stock Exchange Composite Index / Technical Analysis

Sustained action below the Shanghai composite 2016 low would increase odds of seeing October capitulation selling in Asia toward ideal bottoming targets.USD/CNH above 6.89 opens the way for a push to 7.0+.A 50 and H shares are vulnerable to this lead break in the Shanghai composite with clear pivot floor supports to press and break with noted targets for a bear to bull reversal.We are probing for key lows in late October/early November to mark a cycle low ahead of a year-end rise.

Sustained action below the Shanghai composite 2016 low would increase odds of seeing October capitulation selling in Asia toward ideal bottoming targets.USD/CNH above 6.89 opens the way for a push to 7.0+.A 50 and H shares are vulnerable to this lead break in the Shanghai composite with clear pivot floor supports to press and break with noted targets for a bear to bull reversal.We are probing for key lows in late October/early November to mark a cycle low ahead of a year-end rise.

In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest that the market is near record net shorts.  After around six months of exodus, funds may also be looking to rebuild positions in emerging markets.  Asia has lagged other regions recently as the market continues to worry about the economic outlook in China and headwinds from sour trade relations with the US.  Nevertheless, it is participating in a recovery in risk assets in the last week.  The capacity for a sustained retreat in the USD against other major and EM currencies may be limited by the recent strong gains in real long-term yields in the US.  This may be limiting the recovery in EUR and GBP.

In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest that the market is near record net shorts.  After around six months of exodus, funds may also be looking to rebuild positions in emerging markets.  Asia has lagged other regions recently as the market continues to worry about the economic outlook in China and headwinds from sour trade relations with the US.  Nevertheless, it is participating in a recovery in risk assets in the last week.  The capacity for a sustained retreat in the USD against other major and EM currencies may be limited by the recent strong gains in real long-term yields in the US.  This may be limiting the recovery in EUR and GBP.

Fundamentals Battle Positioning, Real Yields Support the USD

Time to step back and take a breath in the FX market.  It lacks conviction, is displaying inconsistent correlations and being whipped around by competing news and views on uncertain events.  The market can no longer rely on the US government to act as a source of stability for global markets.  The rebound in Asian currencies is counterintuitive as US pressure mounts on Chinese trade and economic relations.  But it may reflect position adjustment, a pull-back in US yields, and US policy uncertainty.  The AUD continues to be supported by strong commodity prices, but domestic, Chinese and global financial stability risks, exacerbated by rising US rates, accounts for its weakness this year; we continue to see downside risks dominating

Time to step back and take a breath in the FX market.  It lacks conviction, is displaying inconsistent correlations and being whipped around by competing news and views on uncertain events.  The market can no longer rely on the US government to act as a source of stability for global markets.  The rebound in Asian currencies is counterintuitive as US pressure mounts on Chinese trade and economic relations.  But it may reflect position adjustment, a pull-back in US yields, and US policy uncertainty.  The AUD continues to be supported by strong commodity prices, but domestic, Chinese and global financial stability risks, exacerbated by rising US rates, accounts for its weakness this year; we continue to see downside risks dominating

Rebounds in Asian Currencies and AUD May Be Short-Lived

China

The Chinese renminbi (yuan) is the official currency of The People's Republic of China. 

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CNY (USDCNY CURNCY)

China and the Devaluation Dilemma

China ended the trading week warning speculators against dealings in RMB. The statement lead the RMB to a turnaround from a 22 month low. For all...

Christopher Balding

ECB and Fed QE Reversal in Play, Credit Risk Dampening CNY and EUR

The CNY has developed a steady downtrend. While this is often discussed in the context of political relations between the US and China, it may...

Greg Gibbs

Shanghai Composite Flash Point

Sustained action below the Shanghai composite 2016 low would increase odds of seeing October capitulation selling in Asia toward ideal bottoming...

Thomas Schroeder

Fundamentals Battle Positioning, Real Yields Support the USD

In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest...

Greg Gibbs

Rebounds in Asian Currencies and AUD May Be Short-Lived

Time to step back and take a breath in the FX market. It lacks conviction, is displaying inconsistent correlations and being whipped around by...

Greg Gibbs

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