Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Chinese Yuan: "Manipulated" Does NOT Mean "Unpredictable"

Currencies / China Currency Yuan Dec 23, 2016 - 12:13 AM GMT

By: EWI

Currencies

"...markets are bigger than governments."

This year's U.S. presidential election brought into focus one market you don't hear about often: the Chinese yuan, or renminbi.

"Donald Trump has been telling us all for a long time now that China is a currency manipulator. It's part of his plan for his first 100 days in office to get on with making sure that China is legally declared to be such a currency manipulator and thus start the process of doing something about it.

"The problem with this is that China really is a currency manipulator. But they're manipulating the value of the yuan up, not down. Thus returning it to the correct free market value isn't going to have the desired effect of closing America's trade deficit with China." (Forbes, Nov. 13.)


However things shake out with China under the new White House administration, let's look closer at the basic premise of this argument -- namely, that China's government manipulates the currency.

By definition, market manipulation means stopping the free-market forces from doing what they do best: setting a fair value of an asset that suits both the buyer and the seller. It also implies that the manipulated market is no longer predictable using trend indicators you would apply to other, freely-traded assets.

So, does this mean that the yuan has been unpredictable?

You be the judge.

Below, you see a chart of the yuan vs. U.S. dollar exchange rate going back to 2014.

The arrows on this chart show you the timing of 15 yuan forecasts subscribers saw over the past two years in our Sunday-Tuesday-Thursday Asian-Pacific Short Term Update, edited by Chris Carolan.


Shanghai. Sensex. ASX200 & Beyond -- See What's Next for Asian-Pacific Stocks

Every Sunday, Tuesday and Thursday, our Asian-Pacific Short Term Update brings you new, objective forecasts for the Nikkei 225, ASX200, Hang Seng, Shanghai Composite, S&P Nifty and more. We've just released the December 20 issue, and we're offering it to you -- FREE -- through this special offer.

Read your free issue now


  • March 18, 2014: "The dollar is rallying and the yuan falling as wave 5 appears complete. With prices breaking out now above the upper weekly Keltner channel for the dollar versus the yuan, we can state that a very large dollar rally is in its early stages."

  • May 11, 2014: "The dollar rally this year versus the Chinese yuan is the largest against that currency since rates were allowed to partially float twenty years ago. The daily chart shows that the dollar has completed five waves up against the yuan. The daily Jurik RSX has now turned lower with a bearish divergence. We should expect some additional pullback in the dollar now versus the yuan. [It] will present an opportunity to become bullish on this cross rate on further weakness."

  • December 9, 2014: "We showed the long-term Yuan charts a few times earlier this year after the dollar completed a long-term, five-wave decline. The subsequent dollar yuan rally managed to break above its upper weekly Keltner channel and then challenge the upper monthly channel. Then, the dollar began a months-long pullback against the yuan. We've been waiting for signs of the next wave higher in dollar yuan. That wave is beginning now."

  • January 27, 2015: "A long term dollar rally versus the yuan fits Elliott Wave International's outlook for deflation. ...the dollar rally versus the yuan remains in its early and formative stages."

  • July 30, 2015: "It's been some time since we checked in on the dollar yuan exchange rate. The rate is pegged by the Chinese government, though it is subject to market pressures. We've been patiently awaiting an upside breakout in the dollar against the yuan. Recent news reports have highlighted the increasing flight of capital from China. That capital flight causes upward pressure on the dollar yuan, which is the direction we've been expecting this market to take for some time. Reports are also tracking heavy Chinese selling of U.S. Treasuries in order to dampen the upward pressure on dollar yuan. For now, the peg holds tight, as shown in the weekly chart. Yet at some point, markets are bigger than governments. We expect dollar yuan to defeat those who are determined to peg it. ...when that time comes, it will be a third-of-a-third wave higher for the dollar against the yuan [targeting] trading area at 6.80."

  • August 23, 2015: "China is holding the line again on the yuan, but their very small devaluation is lagging far behind the large moves in their neighbors' exchange rates. The offshore yuan continues to put pressure on the Chinese for further devaluations. That devaluation will come, but we may need to wait a while before it occurs."

  • October 13, 2015: "The bigger picture in the yuan shows that the dollar decline since the sharp devaluation move is clearly corrective. To sum up all the evidence, we are closely monitoring these markets for an expected resumption of volatility across all financial markets."

  • November 10, 2015: "The dollar is once again stronger versus the offshore yuan than the official, onshore, pegged trading. A higher dollar versus emerging market currencies will once again pressure China to devalue the yuan. We continue to expect the yuan to trade at 6.8 per dollar in coming months."

  • December 15, 2015: "We're seeing the Chinese yuan's steady devaluation as the fixed onshore exchange rate continues to follow the offshore rate, where the dollar is moving higher. The 6.80 level of Minor wave 4's trading range as shown on the monthly chart is our minimum target for this move. The yuan's devaluation will keep the pressure on emerging market currencies in coming months. Each country believes the best way to fight deflation is to devalue their currency and export that devaluation to their neighbor. These pressures on all currencies to devalue will continue into 2016."

  • January 12, 2016: "The yuan will move lower regardless of Chinese government actions. But this reversal today likely marks the wave (iii) top in the dollar, so we may expect a week or more of quieter yuan trading before the long-term dollar rally resumes."

  • April 24, 2016: "The yuan seems poised for another round of devaluation as the dollar exchange rate moves higher in Minute wave v."

  • May 10, 2016: "The dollar is moving higher again versus the yuan as Minute wave v gathers upside momentum. The dollar is trading at the largest premium over the yuan on the offshore market since February. Look for the dollar to continue towards our long-term price target at 6.80 yuan per dollar in coming weeks and months."

  • June 19, 2016: "The dollar advance against the yuan continues. This Minute wave v rally is orderly so far."

  • October 4, 2016: "We have a long-term minimum target of 6.83 for this advance, which is the level of the previous fourth wave, the end of the Minor 4 triangle in 2010, shown on the monthly chart. We first issued that price target over a year ago in 2015. This strong, long-term trend up in the dollar versus the yuan deserves our respect."

  • November 8, 2016: "The Chinese yuan has reached our long-term price target of 6.80."

So, what should we make of this brief history?

It's best summarized by this quote from Chris Carolan's Asian-Pacific Short Term Update:

"The [dollar/yuan] rate is pegged by the Chinese government, though it is subject to market pressures.

"...markets are bigger than governments."


Shanghai. Sensex. ASX200 & Beyond -- See What's Next for Asian-Pacific Stocks

Every Sunday, Tuesday and Thursday, our Asian-Pacific Short Term Update brings you new, objective forecasts for the Nikkei 225, ASX200, Hang Seng, Shanghai Composite, S&P Nifty and more. We've just released the December 20 issue, and we're offering it to you -- FREE -- through this special offer.

Read your free issue now

This article was syndicated by Elliott Wave International and was originally published under the headline Chinese Yuan: "Manipulated" Does NOT Mean "Unpredictable". EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules