We should keep a close eye on the USD/CNH (candle chart) and the AUD/USD (bar chart) as the weaker Yuan (CNH) is a type of “stimulus” for the Chinese economy as the Chinese government adjusts the peg and makes way for a weaker Yuan assisting exports and domestic downside pressures. In other words, the Chines government may continue to weaken the Yuan instead of direct stimulus assisting the stabilization of the Australian dollar which relies on a stronger Chinese economy.

4-22-14CNHAUD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

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