And the situation could get even worse, as the growing pressure on the Chinese economy weighs even more on the yuan currency. It is on the brink against the dollar, with the potential to hit its lowest levels since January 2008.
Today’s trade balance data once again highlights mounting pressure on the economy and so far Beijing’s measures are failing to convince markets that they are the right thing to do. solution to remedy the situation.
The November high of last year stands at 7.327 for USD/CNY and a break above will allow it to challenge levels last seen in January 2008.
Chinese authorities have been trying hard to defend the currency lately, but that seems inevitable as pressure continues to mount on the economy.
Again, this is another major point to watch for overall market sentiment and a technical breakout would also provide indirect tailwinds to the dollar itself, alongside higher bond yields at the moment.