The USDCNH pair is one of the most popular financial instruments in the world. It includes the currencies of the two most powerful economies: the United States and China.
USD (United States Dollar) is the national currency of the United States of America. The USD currency is issued by the Federal Reserve System.
The US dollar exchange rate is mainly influenced by the FRS macroeconomic and monetary policy. To make a forecast regarding this instrument, traders should monitor changes in interest rates, retail sales, labour market data and the trade balance. The volume of import/export also strongly affects the price of the American currency: with an increase in imports, the USD rate grows, and with an increase in exports, it decreases.
CNH (Chinese Yuan) is the currency of the People's Republic of China. Large production facilities of foreign companies are located in China, and most international payments take place in yuan. The People's Bank of China (PBoC) controls the circulation of the national currency and its rate. For a long time, the yuan was pegged to the dollar, but in 2005 the National Bank abandoned this peg, as a result of which the yuan immediately rose by 2.1%. In 2016, the yuan became another reserve currency of the IMF along with the US dollar, euro, pound sterling, Japanese yen, Swiss franc.
The yuan exchange rate is influenced by China's economic relations with other countries: the USA, EU, Japan, Russia. For example, introductions of additional customs duties by the US has repeatedly weakened the Chinese currency. The value of the yuan is influenced by the actions of the Chinese government and macroeconomic indicators: devaluation management, changes in the development rate of the PRC economy, statistics of the employment market, GDP level, etc.
It is important to follow the news in order to trade USDCNH successfully. US sanctions could weaken the yuan, but China can also impose such measures against the US.
The USDCNH pair is highly volatile. Experienced traders take advantage of this in short to medium term trading. However, it is important to remember that this instrument is not suitable for scalping due to large spreads. You should also be very careful about long-term trading because of the high swap.
Risk warning: Trading in FX and CFDs entails high risk of losing capital.
