We see that the battle escalation phases coincide with the intervals of appreciation of USD towards the CNH, whereas the battle pacification phase
We see that the battle escalation phases coincide with the intervals of appreciation of USD towards the CNH, whereas the battle pacification phases present the foreign money pair decline. The identical is seen within the Superior Oscillator window.
The explanation behind that’s the following. The extra intense the disaster was and the extra unsure the long run appeared for the market individuals, the extra the US greenback was demanded by buyers as a resort to preserve their funds with a safe-haven foreign money. Conversely, when issues have been going again to regular, the optimism of the market individuals was supporting a extra risk-accepting temper and therefore the demand for the Chinese language yuan grew.
The second of fact
The logic behind the appreciation of USD towards the CNH in disaster occasions is identical that makes the value of gold or some other safe-haven foreign money or commodity achieve worth when issues look unhealthy. It rests on the psychology of the buyers: when the long run outlook is unfavourable, they search to re-direct their funds into safe-haven property, such because the USD within the case of USD/CNH, additionally JPY and CHF among the many main currencies, gold as talked about already. Consequently, the upper demand for these property raises their costs.
Therefore, the fundamental analysis right here is vital. A unfavourable information launch pushes the safe-haven foreign money or commodity up, so it is advisable to act on…