Yuan unchanged as the Pound falters

Yuan investors are facing a funding squeeze, escalation of capital controls and mixed economic data, said Stephen Innes, senior trader at Oanda.

“Last week’s trade data tempered the market outlook on China. I think global uncertainty will continue to weigh on China trade and the potential for a trade war between US  and China is a possibility, which points to further risk for China on the trade front,” he said.

China reported a 7.7 per cent year-on-year drop in exports and a 5.5 per cent decrease in imports for the full year 2016. The export drop was the worst since 2009.

“China still wants an orderly depreciation of the yuan to offset mounting trade uncertainty, and while I think the yuan depreciation will likely continue post-Lunar New Year, fears of more funding squeeze continue to plague the market and there’s simply less appetite for the short yuan trade at this juncture,” Innes said.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes