Global macro overview for 09/10/2018

Financial markets remain in a mood of gloom at the informational sphere focused on the problems of China and Italy. Poorly Chinese yuan, which sends bad vibrations among others towards AUD and emerging markets.

Investors focus on the negative aspects of the decision of the People's Bank of China to lower the RRR rate. In the longer term, what may translate into support for economic growth (lower interest rates are more lending), for the time being, the move is interpreted as preventing the negative implications of US trade wars and increasing the pressure on the yuan's weakening. It is also a signal that the Beijing government allows the increase in USD / CNY above 6.90 - a few months ago it was treated as a pain threshold that China would want to prevent. The continued depreciation of the yuan, on the one hand, confirms that China intends to mitigate the effects of trade wars in this way; but on the other - they are opening the way to strengthening pressure on the sale of other currencies of emerging economies.

Let's now take a look at the USD/CNY technical picture at the daily time frame. The market is again testing the swing high at the level of 6.93, but the conditions are now overbought. The larger time frame tren dis still up so there is a chance for another leg higher towards the level of 6.95 and even 7.00, but the bearish divergence between the price and the momentum indicator is suggesting a short-term pullback might happen any time now.

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