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USDCNY briefly slips below 7, 6.85 can be in sight if investors cheer US-China trade agreement

Nov 6 2019, 09:22 AM (BDT) | Forextime.com

 

 

 

If those who watch the market ever needed a reminder at how important positive US-China trade headlines can be to investor sentiment, they received more clarity on Tuesday as optimism builds that both sides will be able to find a resolution.

 

The price of Gold slipped straight through $1500 to hit its lowest level so far in November around $1485, while the price of US Oil is nearing levels not seen in over two months after appreciating $3 since Friday of last week.

 

Broader risk appetite can also be noted across a range of asset classes, including US stock markets reaching new record-highs and commodity-linked currencies, such as the Australian Dollar approaching levels close to near 3-month highs.

 

In terms of emerging market trends seen in APAC, the Malaysian Ringgit (USDMYR -0.47%), Indian Rupee (USDINR -0.11%), Indonesian Rupiah (USDIDR -0.32%), Philippine Peso (USDPHP -0.24%) and Korean Won (USDKRW -0.15%) all benefited from coordinated attraction towards emerging market assets, and strengthened against the USD.

 

Of course there is no stronger proxy for how investors look at US-China trade tensions than the Chinese Yuan.

 

The Chinese Yuan managed to advance by 0.3% with the USDCNY at one point breaking back below the ever-important, and critical psychological support level at 7.

 

Hopefully a resolution to US-China trade differences will be found, and while we have been here several times in the past, if investors do hold faith that a trade agreement (that lasts) is in place USDCNY could potentially decline all the way to 6.85.   

Forextime.com

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