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USDCNH

USDCNH Facing Bearish Pressure | 9th June 2021USDCNH broke below ascending trendline support (now resistance). Price has also tested and pulledback below this trendline resistance. A further drop below our entry and Key 61.8% Fibonacci retracement level at 6.40076, with a possible downside target at 6.37686 could be possible. Our take profit at 6.37686 is also in line with a Fibonacci confluence zone where we have -27.20% Fibonacci retracement and 100% Fibonacci extension . Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by FXCM
1
USDCNH | Perspective for the new week The price moved against expectation as it continues to find lower lows in the last one month (you might want to see the link below for reference purposes); As part of China’s move to create awareness of its digital Yuan, authorities in Shanghai is planning to distribute $3 million worth of the central bank-issued currency among residents of Shanghai in the form of a lottery. Coupled with the appearance of a Descending Channel, this development appears to give a level of cynosure for investors as I anticipate a risk of further decline for the USDCNH pair in the coming week(s). Tendency: Downtrend (Bearish) Structure: Supply & Demand | Channel | Breakdown | Harmonic pattern (AB = CD) Observation: i. Since late March 2021, the price has been caught up within a Descending channel as the Greenback experiences risk of further decline in the nearest future. ii. As represented on the chart, connecting the lower highs and lower lows of price action with parallel trendlines reveals a downward trend that appears to hold following the Breakdown and retest of Y6.41000. iii. Below the Key level @ Y6.39600 remains a yardstick for entry opportunity as I look forward to a transition into a Harmonic pattern (AB = CD) with parameters explained below; a. Impulse A-to-B is expected to be in harmony with the potential C-to-D leg. b. The B- to-C leg is currently at 61.8% Fibonacci retracement (with the possibility of a 78.6%) of the A-to-B leg. c. The C-to-D leg is expected to fall within 127.2 - 1.414% Fib. ext . of the A-to-B move @ Y6.32000 area. Trading plan: SELL confirmation with a minimum potential profit of 550 pips. Risk/Reward : 1:4 Potential Duration: 4 to 8 days NB: This speculation might be considered to make individual decisions on the lower timeframe. Watch this space for updates as price action is been monitored. Risk Disclaimer: Margin trading in the foreign exchange market (including commodity trading, CFDs, stocks etc.) has a high risk and is not suitable for all investors. The content of this speculation (including all data) is organized and published by me for the sole purpose of education and assistance in making independent investment decisions. All information herein is for your reference only and I take no responsibility. You are hereby advised to carefully consider your investment experience, financial situation, investment objective, risk tolerance level, and consult your independent financial adviser as to the suitability of your situation prior to making any investment. I do not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or the receipt of any instruction or notification therewith. Past performance is not necessarily indicative of future results.
Short
by darcsherry
2
USDCNH | Perspective for the new weekThe prospects for further downside in USD/CNH remain a dominant subject amongst market makers as China is rolling out a digital yuan that will make her the world's second-largest economy the first country to create its own digital currency; I see a Reversal setup building up with structural tendencies that might drive the Greenback to higher highs in the coming week(s). Tendency: Uptrend ( Bullish ) Structure: Breakout | Supply & Demand | Reversal pattern Observation: i. Since mid-February 2021; the price of the Dollar has risen as it continues to find Higher highs until a successful Breakout of Key level happened early in March 2021. ii. It is obvious that the Y6.54000/6.50000 that has been a strong Supply zone for close to 3 months was finally hijacked by buyers in March 2021 with a successful Breakout. iii. Following the Breakout, the price found a niche around Y6.48000 which appeared to be a new Demand zone for Bullish expectation. iv. Taking a long term perspective view on the weekly chart; I see price action transition into a Corrective phase after the Impulsive Bearish move that began mid-last year in the coming week(s) hence my Bullish bias. v. With my Key level marked @ Y6.49000, I shall be looking forward to buying opportunity above this level to join the potential rally. Trading plan: BUY confirmation with a minimum potential profit of 1,800 pips. Risk/Reward : 1:6 Potential Duration: 15 to 25days NB: This speculation might be considered to make individual decisions on the lower timeframe. Watch this space for updates as price action is been monitored. Risk Disclaimer: Margin trading in the foreign exchange market (including foreign exchange trading, CFDs, etc.) has a high risk and is not suitable for all investors. The content of this speculation (including all data) is organized and published by me for the sole purpose of education and assistance in making independent investment decisions. All information herein is for your reference only and I take no responsibility. You are hereby advised to carefully consider your investment experience, financial situation, investment objective, risk tolerance level, and consult your independent financial adviser as to the suitability of your situation prior to making any investment. I do not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or the receipt of any instruction or notification therewith. Past performance is not necessarily indicative of future results.
Long
by darcsherry
Chinese letting the USD recover while they conquer the universeIf you like Elliott waves this pair is doing a wave 4, looking at the chart more than just ultra zoomed in we can see those appear previously: On 1 hour the price is going ABC and ending with a strong red candle like some "capitulation" I think it can drop quickly a last time then reverse. If the price on this 1 hour makes a double bottom or V shape bounce is not important and I don't look too much into it buyers are sellers are fighting on the daily chart, this has nothing to do with day gambling as retail does not trade this pair AUDNZD still has 40 times more myfxbook positions than USDCNH, AUDNZD more relevant to the world economy according to retail :) It just hits the eyes, clearly this is not part of the big 2020 downtrend where China was rearing a dumper truck full of usd and unloading. What China FX reserves are made of is classified info, all I know is they are human and they are all the same, they are done selling for now (not contractual info), I'm sure they have some usd left at least a trillion, not in their best interest for the USD to go to zero (yet). I don't know who the dumbasses buying the USD are, well there is me 🙂, but anyway there are always buyers; Since this is now clear to everyone it is not just a little pullback in a downtrend it could continue for a little while. When it went down it did following a clear trendline all the way down, now it is following a trendline on the way up. A bit too simple... The chinese all too communist to make money in the exchange markets? But Karl Marx loved the markets (probably due to a "I don't want to work if only I could make a lot of money on a luck streak" and gambler mentality). Plus chinese government letting everyone know what they are doing in advance haha. Maybe it's not "inefficient" as US regulators love to say, it's simply that in the absence of retail gamblers no one is stupid enough to go against the painfully obvious trend when the government announces what they are doing? How is sentence even a thing, how are these people so bad? 😆 Nah they're a tiny minority in FX they can't possibly have a significant impact, just bankers hate risks and love simple trendlines, and FX doesn't have that many speculators trying to extract money since 2008-2013. FX undervalued by now. The USA are not part of the OBOR/BRI project. China not investing long term into the US, their future commercial mega-empire does not need them doesn't mean they don't need them NOW. Idk not much more to say, the price here is at the risk point it could reverse from here so best cheapest place to take a buy, close to getting invalidated, maximum financial opportunity.
Long
by MrRenev
2
7 MOST IMPORTANT CHARTS TO WATCH RIGHT NOW1. VIX is filling the gap from when the Feb-Mar crash begun. Volatility is getting supressed when things actually look very fragile with Central Banks having nothing under control. A VIX spike (big move down for stocks) wouldn't be a surprise here for reasons I'll explain soon. 2. DXY looking strong here. The 50 DMA has turned up and dollar strength could be a problem here. Watching other charts tells me things are OK, so the weakness comes from specific currencies. Some currencies are doing very well while others very poorly and there is no concrete way to go about it. 3. CNH/CNY however are very clear as to what is going on. They seem to be in agreement with the DXY. The relentless USD downtrend has been broken and the USD is showing signs of life. Despite the QE, despite the massive stimulus... the USD hasn't gone down. That's not a great sign. Sure most currencies are getting devalued, but if the USD is so strong and could begin an uptrend we have a problem... 4. Essentially most of that is attributed to US long term rates going up faster than anywhere else. This could be happening for many reasons, right or wrong. Inflation might be here, inflation might be coming... but it depends on which country you are looking at and in what form you are seeing it. Is it because of supply shocks (i.e low Oil and Copper production), currency debasement, loss of faith in the currency or trade wars etc? It could be many combined, but when we see bonds go down it could the fact that we have a lot of supply coming in and not enough demand. Maybe we had such a big bull market that people are taking profit. However the impact this has on the market is on many different levels and it comes down to how the market is structured, stock valuation models, different investment strategies and so on. So the more yields go up (bonds down), the bigger the problem becomes if it is relentless. 5. Gold has been going down because real yields have been going up and people have been taking more risk. Why hold gold and not other more useful commodities or riskier assets in general? Gold going up isn't a good thing. It means something is not going well. Over the last few days Gold didn't go down along with bonds, which is worrying. It is stuck between and uptrend and a downtrend, however it is clear it is currently in a downtrend as it is below all key MAs (50-200-300 DMAs). 6. Oil has had a massive rally and I can't tell whether it is over for now but it could be. Very high oil prices in the current environment wouldn't be ideal, but hopefully because more oil is being produced, not because demand is down. Low oil demand means low growth and bad things in general going on. High oil demand means growth and go things going on. Oil got above the 2019 highs, swept them, retested them and went down quite a bit. It also crossed above the big diagonal downtrend from the 2008 high all the way down here and then came back down. If it closes like this and goes lower, I can't rule out 52$ or even 42$, but if it starts going above 68 it could quickly accelerate higher. 7. RUA is the index that has the top 3000 US stocks, spot. It is just an index and doesn't track futures but spot, so it isn't open 24/5. Stocks are still in an uptrend, which Japanese and European stocks showing quite a bit of strength. We've seen quite a few US stocks do well, but if the top US stocks struggle because of higher rates... there could be a big problem. If bonds start selling off hard, the borrowing costs for many companies will skyrocket. That is clearly a massive issue right now. So is a 20% like the one we had in 2018 possible? Yes it is. Do I think stocks could still go parabolic? Of course, but it might take some extra time to get there. We need bigger actions from central banks and eventually bonds slowing down and go up slowly. For now we could get another 5-10% correction, test the trendline and go higher. Until I see the market close below I think up is more likely, although I am more cautious.
by BitcoinMacro
Carry Trades, Margin Rates and all the FakesFor some strange reason the retail trade still appears to believe that the good old stand-bys are working as carry trades" ( AUDJPY , NZDJPY , GBPJPY , etc.) The fact remains that today, those don't even make the Top 5 of professional traders' (e.g., the industry) preference list. Interest rate differentials combined with existing margin rates make most of the majors crosses a very unappealing proposition as far as carry trades are concerned. Because of this the industry has moved on, quite some time ago. (As is the nature of the present, speculative bubble.) As for the top 5 of the majors, it's mostly about the US Dollar ; 1) USDCHF 2) USDJPY 3) EURUSD 4) NZDCHF (This one is likely to drop a few places, soon.) 5) CADCHF Then, there is the rampant "interest" (i.e, speculation) in all things BRIC vs. G10, for reasons which should be self evident. (Interest rate differentials, capital flows, etc.) I.e., MNX, CNH , BRL , ZAR , TRY versus the EUR, JPY and the USD. Thus, if one happens to be looking for volatility and low-hanging fruit out there, these FX pairs are deserving a fresh look. (They are volatile, though thus, be prepared!) Here is the "Central Bank Score Board"; ------------------------------------------------ - Swiss National Bank -0.75% - Bank of Japan -0.10% - Federal Reserve 0.00%-0.25% - European Central Bank 0.00% - Bank of England 0.10% - Reserve Bank of Australia 0.10% - Bank of Canada 0.25% - Reserve Bank of New Zealand 0.25% - Central Bank of Brazil 2.00% - Reserve Bank of India 4.00% - Reserve Bank of Russian Federation 4.25% - People's Bank of China 4.35%
by Nemo_Confidat
USDJPY <-> The World; Carry Trades, Safe Havens on the VIX ScaleThe Title Chart is a representation of the impact of each 1% change in the (SP500) VIX on various currencies' (and Gold; Bitcoin) to tend to more (or less) toward Risk (instability) or Safe Haven (stability) characteristics . I.e. It depicts the relationship between market uncertainty and exchange rate movements of safe haven currencies (and currency "equivalents") An important note on: Context! View this article in the light of two, undisputed facts; Margin debt – the amount of money that investors have borrowed in order to buy stocks – is now at the highest level in history, not only in absolute terms, but also relative to U.S. GDP. The present ratio of U.S. total equity market capitalization to GDP is 2.63. The historical norm (not the low!) is 0.78 . - Which is about 70% below the current level. In light of the above facts the central question remains the same; Can business as usual continue (and for how long?) or, is there is a global, catastrophic financial collapse on the horizon?... You decide. (This post may help; ) The remainder of this article is based on various notes and research, taken at a RIETI Conference (Research Institute of Economy, Trade and Industry), a couple of years ago - before the Covid Pandemic. However, I shall omit most (if not all) of the technical details, calculations and such here, for brevity and clarity's sake. Introduction The Japanese yen and the Swiss Franc are often called a safe haven currency—a currency that appreciates when the risk-averse behavior of global investors and the uncertainty of economic policy and outlook increase, while the U.S. dollar is regarded as the most reliable international currency as an anchor. The safe haven status is usually observed for a country that has the current account surplus, low interest rates—the funding source of carry-trade opportunity—, and the investors’ perception as the safe-haven currency, resulting in suffering from the deterioration of the trade balance during a crisis. That may improve the trade balance of the country’s trade partners and competitors, especially if their currencies are vulnerable to a shock. The yen tends to rise during periods of increased financial market volatility. This tendency—clearly evident when the currency surged after the Brexit shock—has strengthened since mid-2015. While widening yield differentials between the U.S. and Japan are a force to weaken the yen, the currency is vulnerable to sudden gains on higher risk aversion The Chinese renminbi (CNY) is a rising star. Its internationalization is on the fast track .The renminbi’s inclusion into the SDR basket represents its internationalization, making the renminbi a reserve currency alongside the USD, the JPY, the EUR, and the GBP. Still, the renminbi was depreciated by 4% between its announcement on November 30, 2015 and actual inclusion on October 1, 2016. Recent political uncertainty generated unexpected shocks—from the U.S. presidential election to Federal Reserve interest rate decisions and political events in Europe—that could affect sentiment toward the yen, the renminbi, and relatively vulnerable Asian currencies, increasing safe-haven demand for alternative assets such as gold and bitcoin. The yen’s safe-haven status may signal in advance shifts in risk appetite in the foreign exchange market. The skew in risk reversals on yen-dollar currency options, which turns negative when bets on yen appreciation outweigh bets on depreciation, tends to follow, or is at least associated with, the index. For example, 12 weeks after the start of a VIX spike, net non-commercial positions on the yen on the Chicago Mercantile Exchange are 20 billion U.S. dollars longer than would be the case absent the rise in the VIX. In the European sovereign crises of 2011, the yen was purchased aggressively as a safe asset3 and finally reached the historical high value, 75.54 yen per dollar and remained around 80 yen. Thus, just after the East Japan Earthquake and the meltdown of nuclear power plants, the highest value of the yen is hard to be explained by economic fundamentals. In January 2015, the Swiss National Bank (SNB) abolished its exchange rate cap against the euro, meaning that the SNB stopped intervening by purchasing the Swiss franc against the euro. As a result, the Swiss franc was appreciated against U.S . dollar by 30% within 10 minutes . At the same time the yen and the Singapore dollar were appreciated by 1% as investors needed to sell the euro and buy some safe currencies instead of the Swiss franc that was limited liquidity and capacity compared to the euro. So, not only the yen and the renminbi, but other currencies in the Asian emerging market may be in transition to the safe-haven status. Here, one tries to measure whether the yen, the renminbi, other currencies, and alternative assets have a safe-haven or vulnerable status. Introducing long-term and short-term gauges help judge if the safe-haven status is temporary or consistent. The results shows that the yen consistently has the safe-haven status, the renminbi temporarily obtained the safe-haven status in early 2010, but has been returning to a vulnerable currency. Increasing political uncertainty in the global market and weakness of the renminbi may increase demand for traditional and innovative alternative assets, though the size and liquidity of the markets haven’t developed well, yet and they are vulnerable to regulatory changes. A bitcoin price surged in late 2016 as the renminbi depreciates, but it tumbled to $789 on January 11, 2017, down 28% from a peak of $1,091 on January 4, 2017. The proximate cause – signals from China’s central bank that they are paying close attention to irregularities in the market. The still relatively small size of the market makes bitcoin impractical as a channel for large-scale capital flight. Gold could be considered as a good asset in the diversification of Chinese portfolios. Wong and Zhu (2015) find, however, it is only for risk-seeking investors and in crisis periods on the Shanghai Gold Exchange in the diversification of Chinese portfolios. So, there are very limited indications that bitcoin and gold could be presently regarded as a safe-haven assets, and while their safe-haven tendency might be increasing, it is particular and limited to relative to the renminbi, under high policy uncertainty. Safe Haven Trades - Short-term Perspectives There are standard and widely available models that captures the safe-haven status of a currency in the short-term and they rely on the assumption of capital flows driven by excess returns from the currency carry trade, rather than uncovered interest rate parity (UIP). The carry trade hypothesis defines the currency carry trade, which consists of selling low interest-rate currencies “funding currencies” and investing in high interest-rate currencies “investment currencies.” They find that carry trades loses money on average, in times of rising VIX. While the UIP hypothesizes that the carry gains due to the interest-rate differential is offset by a commensurate depreciation of the investment currency, empirically the reverse holds. The investment currency appreciates a little on average despite with a low predictive R2 (Fama1984). This violation of the UIP – often referred to as the “forward premium puzzle” – is precisely what makes the carry trade profitable on average. To be able to successfully solve the UIP “forward premium puzzle” (successful carry trade), the addition of a gauge of market risk sentiment to predict the future spot exchange rates is essential. To predict the change in the expected exchange rate is usually explained by a change in interest rate differentials and the market risk sentiment. To capture the impacts of a change in the market risk sentiment on exchange rates, a rolling OLS regression of a daily change in the VIX and the two-year yield differential between local currency and the U.S. dollar on a percentage change in local currency per dollar is used. Normally, The VIX is a good measure of investors’ risk sentiment. Increases in the VIX are associated with higher volatility in Japanese and Germany stock prices, as measured by the Nikkei VI and VDAX, as well as in the yen’s exchange rate to dollar. The VIX correlates, under normal circumstances, to the Nikkei VI at 0.83, to the VDAX at 0.87 and to implied volatility on 1- month at-the-money yen-dollar options at 0.71, with the addition of the two-year government bond yield differential. A standard model would go something like this; dLn(LCY/USD) = a+b1d(USDLCY_2Y)+ b2 𝑑(𝑉IX)+e where "LCY" means the local currency, USDLCY_2Y is two-year government bond yield differential, the VIX denotes the implied volatility of S&P 500 index options6, "e" is an error term. The UIP assumes the sign of the coefficient of USDLCY_2Y is negative, while the carry trade hypothesis sees its sign positive during a normal period. So, the determinants of its sign are answers to an empirical question, rather than a theory. The coefficient of the VIX is defined as the Safe-haven Currency Index (SCI) and assessed the safe-haven status as follows: SCI > 0: Period and country specific "safe-haven" type tendency. SCI < 0: Period and country specific “vulnerable currency" type tendency. SCI = 0 or insignificant: exchange rate movement doesn’t follow a specific tendency. Safe Assets – Long-term Perspective The safe asset indexes indicate mostly three currencies – the Swiss franc, the yen, and the dollar – out of the 13 currencies which mormally maintain safe-haven status. Although the Swiss franc has the strongest safe-haven status on average, its status has been weakened from 2007 until 2011 – the period of the Global Financial Crisis and the European Sovereign Crisis. That is likely because Switzerland has suffered from rapid currency appreciation against the euro and thus, its safe-haven demand relative to the dollar seemed to be limited. In contrast, growing dollar demand during the crises had strengthened the dollar’s safe-haven status. The yen has consistently kept the safe has status during previous risk-off episodes. However, the currency status of some currencies has been switching between a safe-haven and a vulnerable currency. The British pound had had the safe-haven status until early 2000s, but it fell into the vulnerable currency status from 2007 until 2015, followed by a rapid depreciation due to the Brexit shock in June 2016. On the other hand, the Singapore dollar was the vulnerable currency until 2011, turning into the safe-haven currency around 2011. Thus, the safe-haven status doesn't necessarily last forever, and it does change overtime. Higher frequency data provides the detailed transitional status in the short-term perspective. The safe-haven status seems to be associated with the internationalization of the currency. The dollar has about 90% of the total share (200%) of turnover of Over-The-Counter (OTC) of transaction from 1995 until 2016. The yen’s share is about 20% throughout the same period. The shares of the European currencies such as the euro, the pound, and the Swiss franc have peaked in 2001; they have been gradually shrinking ever since. In contrast, the Asian currencies have been consistantly emerging, in the meantime. The share of the renminbi, the Singapore dollar and the Won reached 4%, 2%, and 2% from 0%, 1%, and 0%, respectively. Safe Haven versus Vulnerable Currency – Short-term Perspective Uncertainty represented by the VIX affects exchange rate movements on a daily basis, given limited fluctuatuons in the two-year interest rate differential between the local currency and the dollar. Zero interest rates are applied for alternative assets. The Yen The Safe-haven Currency Index suggests that the yen has kept its safe-haven status during the global crises. The results of the ordinary least square rolling (OLS) regression in daily data supported this scenario. The yen’s safe-haven status has been held firm since 2007 except for a period of the aftermath of the Great East Japan Earthquake and the downgrade of the U.S. sovereign rating d by Standard and Poor. Still, even when the yen had its vulnerable status period, it still wasn't significant. Since market participants tended to expect higher possibility of massive monetary easing as the part of the Abenomics in late 2012, the yen’s safe status has been strengthening. The index shows that each 1 percentage point rise in the VIX is associated with a 0.13% appreciation in the yen as of January 26, 2017, while 1 percentage point increase in two-year interest rate differential between the U.S. and Japan is accompanied to an 11.4% appreciation in the yen. The negative coefficients of U.S.-Japan interest differentials held virtually for ythe entire period. Removing the yield differentials strengthens the absolute impacts of a change in the VIX, but it doesn’t change the robustness of the yen’s safe-haven status. These results support the carry trade hypothesis rather than the UIP. A shift in the monetary policy framework helps explain a change in the yen’s safe-haven status. Lower interest rates increase opportunity for the carry trade, strengthening the save haven status. The structural breaks for the safe-haven status are tested with the Schwarz criterion in global information criteria. The test signals July 21, 2006, August 31, 2010, and January 31, 2013 as the timings of structural breaks. These dates are relevant to significant changes of monetary policy framework in Japan. The Bank of Japan lifted the quantitative easing policy in March 2006 and the zero-interest-rate policy in July. The BOJ introduced ‘comprehensive easing policy’ in October 2010, and the BOJ introduced asset purchase programs in April 2013. The coefficient of the VIX was around zero in late 2012, but it dropped to -0.25% in early 2014. Further monetary easing appears to enhance the yen’s safe-haven status. During the same period, Japan’s net foreign asset relative to the GDP has been highest in the world, but it has decreased in the dollar terms. Consequently, investors’ risk appetite and their perception for the yen’s safe-haven status would play a vital role in the determination of exchange rate movement. The strength of its status may rely on excess profits from the carry trade rather than economic fundamentals such as net foreign assets and reserves. The long-term government bond yields contain more risk premium than short-term yields. Still, the yen’s safe-haven status, which reflects invertors’ risk appetites, is robust even if adding in a change in the yield curve: the ten-year, two-year spread between the U.S. and Japan. An increase in the spreads means the U.S. government bond yield curve is getting steeper relative to the Japanese government bond yield curve. The coefficient of the VIX remains significant overall even if a rolling regression is implemented with the yield curve variable. These results suggest a higher level of VIX predicts higher returns for investment currencies and lower returns for funding currencies, and controlling for VIX reduces the predictive coefficient for interest-rate differentials. That is consistent with the carry trade hypothesis. Renminbi’s Shift to Vulnerable Currency Status The SCI suggests the renminbi is a vulnerable currency except the period of 1997-2001. As capital flows from and into the Mainland China are restricted its interest rate differential to another currency and the VIX haven’t well tracked the movement of onshore renminbi (CNY). In order to capture the investor’s risk perception under uncertainty, the offshore renminbi (CNH) might be the more appropriate gauge of the safe-haven and vulnerable status. In fact, during the risk episode such as the U.S. sovereign credit downgrade, CNH tended to depreciate more rapidly than the CNY did. The tests for safe-haven status of the CNY are neither stable nor significant, not only against the Dollar but also the Euro. In contrast, the CNH’s vulnerable currency status against the dollar and the yen is readily observable and consistent. All the while its status relative to the Euro was regarded as a safe-haven until April 2014, significantly shifting to a vulnerable currency by May 2015. These results are consistent with structural breaks, overall. Alternative Assets: Gold and Bitcoin Those two asset classes reamin relatively fractional to global risk assets and stock market market capitalization. As of this writing, they remain miniscule to even consider them as alternatives in light of the $75-$220 Trillion (depends who is counting) total, unfounded, global liabilities. Conclusion All of the above suggest that the Yen is a safe-haven currency as well as safe asset and it's status as such is unlikely to diminish in the foreseeable future. Its safe-haven status is stronger on average than other safe-haven currencies such as the Swiss franc and especially far outpacing that of bitcoin and gold. The offshore traded renminbi (CNH) maintains a very much vulnerable status to the U.S. Dollar and the Japanese Yen and this is has also minimal impetus to changes in the foreseeable future. Higher market uncertainty with policy swings may increase safe-haven demand for alternative assets such as gold and bitcoin but there are certainly no tendencies at present that, given these alternatives' very limited liquidity, they would factor as substitutes for the Yen or the US Dollar in the foreseeable future.
by Nemo_Confidat
3