By Michael McCarthy, Chief Market Strategist, CMC Markets Australia Never traded the Chinese yuan? The real possibility that USD/CNY will one day be as important as EUR/USD means it’s never too early to start. At the moment, the Remnimbi (or “the people’s currency”) is a dirty float – the rate is allowed to fluctuate but ultimately is controlled by the central bank. The People’s Bank of China (PBOC) is moving towards a free float over the long term, and one step in this process is allowing outsiders to trade a version of the yuan that settles in Hong Kong, as direct settlement with mainland banks is also tightly controlled. So foreigners can’t trade CNY, but they can trade CNH. The central authorities in China have committed to keep GDP growth around 7% – where we are now – using targeted measures. To slow the downtrend that bought GDP to this level at the most recent read, the PBoC has moved three times since last November to stimulate the economy. Allowing the currency to weaken appears to be in the PBoC toolkit. The yuan has strengthened from the 6.29 level to touch 6.20. This could revert to USD/CNH highs, especially if USD strength resumes (ISM/PMI anyone?) The MACD has turned, and there is a gap that could be filled which coincides with resistance. Source: CMC Markets