Today's Highlights
PBoC Drops the Bomb
Bitcoin Plunges
Banxico's Flop
NFP Today
Please note: All data, figures & graphs below are valid as of January 6th. All trading carries risk. Only risk capital you can afford to lose.
Market Overview
Stocks are rather flat today as we await the NFP results. Yesterday saw almost no action whatsoever from the major global indices, nothing worth mentioning anyway.
The action of course is in the currency markets as some central banks are stepping up their game. If the last few years was a currency war, China just dropped a nuke!
They sold off enough of their foreign reserves to cause a 1900 pip plunge in the currency, a 2.73% move in about 24 hours.
The market has recovered some of that move already. Many clients on our platform are saying thank you to the PBoC for creating another opportunity to buy the pair and still belive that we will eventually break 7 yuan to the dollar.
Bitcoin CNH Correlation
Yesterday we made a short video about what's happening to bitcoin lately, if you haven't seen it yet, feel free to watch that now. One of the things we touched on was the Chinese effect on BTC.
Indeed, we can see a huge correlation between the two currencies with the USD/CNH often acting days or even months ahead of Bitcoin.
... if we drill down, we can see that the $150 plunge that we saw in bitcoin actually came hours after the PBoC's nuke (mentioned above).
Banxico
No doubt the Chinese intervention was well planned and well executed. One institution that can certainly learn from the PBoC is Mexico's central bank, Banxico.
Yesterday, Banxico sold off about $1 billion in foreign assets to try and trump the Trump Trade that's been squeezing the peso lately.
As you can see, the USD/MXN did indeed plunge, but it recovered quite quickly with a bit of help from a tweet.
For now the pair is relatively stable. Our friend Damian has been selling the USD against the peso with his target at 20.80.
Disclaimer: This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.