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The offshore renminbi has reportedly plummeted against greenback even though the ADP employment index is lower than expected. The renewed price is now around 6.876 around after the great-selling-off for USD which tanked the USD against Yuan. The key driver of the tumble is Huawei. As the biggest telecommunication supplier. CFO get arrested can be catastrophic to the operation. Value of renminbi is somewhat relevant to the tele giant in China what sparks the market risk aversion is the time of the news. It is precisely the same time at the Trump-Xi Saturday dinner.
Last Saturday, the negotiation leading by the head of each party in the trade war portrayed to be a success. The USA is agreed to pause the imposition of the new tariff over the Chinese commodities, and China nodded to purchase more agricultural products and respond favourably to the IP theft and other international affairs. Meanwhile, Meng Wanzhou, the CFO of Huawei Technologies Co, is apprehended in Vancouver in the airport and custody. The arrest is likely linked to violating sanctions against Iran. Beijing promptly reacted with outrage, demanding to free Meng. As the daughter and the theoretical successor of Huawei Empire, Meng plays a significant role for China to be self-sufficient in strategic technologies. The action disappointed most of the Chinese Internet enterprises and witnessed stocks (conceptual stocks) slide. It could be a signal of another round of ‘game’ between US and China. Otherwise, a trade war is not closing to the end. So the Friday night will be newsworthy as the Auction against Meng and NFP will both drive the market.
On the USD side, economic outcomes are disappointing. ADP Employment Change is 179K which is lower than consensus number 195K. The result signalled a less favourable NFP result. Initial Jobless Claims for the week ended November is increased to 231K. While the Unit Labor Costs rise by 0.9%, all of them are unfavourable compared to the expected levels.&nbsp;
Technically speaking, the volatility of the pair is less now as the price is now steady between the two MA. Bull and bear power both suggest that the market is far less activated and held for the release of NFP tonight. Most of the technical readings are directionless. So the pair possessed a neutral-to-negative short-term outlook. Investors can seek to speculate on the 50% retracement level and 38.2% retracement. The break of each one from low or high can indicate the open of a new space. The medium-term target for the pair is less than 7.

Is huawei the appropriate way in the trade war? Insight of USD/CHN

Dec 01 2020