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SP500: Follow the Chinese Yuan My Dear ?
January 11  ​( From TradingView )
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​​The Situation

In these uncertain times, it is interesting to look the behavior of
​the ​Chinese Yuan ( Yuan Renminbi - candles ) ​in relation to the
​Mighty SP500  ( bar chart ) ​on the ​chart below.

Not surprisingly to me, the US stock market became quite sensitive
of all economic situation in China in 2015 including the exchange
rates shifts​.

The first real shot across the bow was sent by the Yuan on SP500​​
that started on August 11 with a series of 3 devaluations which
​represented the largest yuan depreciation for 20 years...

SP500 Index went from 2084.07 closing price on August 11 to 1867.61
​on August 25, a fall of 10.3%...

The decision by the IMF​​ to include China’s currency in its lending basket for reserve currencies did not change that much on a short term basis as the new currency basket comes into effect only starting in October 2016.


The second real shot across the bow was sent by the Yuan on SP500​​ that started on December 11 when the People's Bank of China's mentioned on its website that it is more desirable to refer to both the bilateral RMB-USD exchange rate and exchange rate based on a basket of currencies. ​( See first chart below - Ellipses )​

We can see clearly a regime change since 2014 on the Yuan  (USDCNY exchange rate) as it broke the weekly channel that started back in August 2010. Since February 2014, we are trading within an uptrend channel (weaker Yuan against the US Dollar). Both the devaluation process of August 2015 and the Central Bank of China to shift to a basket of currencies bring a spike above the resistance of that uptrend channel.
​​( See second chart below - Top Panel - Uptrend Channel )​

The third shot across the bow was sent by the Yuan on SP500​​ that started on January 6 when the People's Bank of China's set its benchmark for the yuan at a five-year low.

​​​​​​The Mighty SP500 already broke its weekly uptrend channel that started back on September 2011 and with the last Yuan move that could bring another pressure wave in US stocks as we saw in August 2015.
​​
​​​( See second chart below - Bottom Panel - Uptrend Channel )​

As China s economic trend lately adds to the wolrd financial markets uncertainties, I think the move of the Yuan will become a must follow as a risk changer indicator in the following months.​​


Read also:

China's Currency But Emerging-Market Peers' Problem: New Yuan


Denials and devaluation as China's currency tumbles to five-year low

​​
​​China to Track Renminbi Based on Basket of Currencies

The Launch of RMB Index Helps to Guide Public View of RMB Exchange Rate

​China signals it might unpeg the Yuan from US dollar

​​​
​​Investors Forecast Weaker Yuan, Despite Inclusion in IMF Currency Basket

Eight reasons why China’s currency crisis matters to us all





Louis Pasteur
"Chance favors the prepared mind."

SP500: Follow the Chinese Yuan My Dear ?  $SPY,  $USDCNY #Trading #investing #yuan #SP500

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​YUAN (USDCNY - Candles - Top Panel )
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