Chinese investors are apparently preparing for the worse in the trade talks in Washington. Expectations is rather low for Vice Premier Liu He. Whether he could save the trade deal or not, it looks like new round of tariffs will take effect tomorrow in either case. Trump’s hard line rhetoric, vowing not to back down, is an indication. White House Press Secretary Sanders also noted the administration is full prepared for stock market reactions.
Rally in USD/CNH (off shore Yuan) accelerates sharply higher today, as Yuan is in free fall. The development further confirms that corrective pattern from 6.9800 has completed at 0.6699 after hitting 38.2% retracement of 6.2354 to 6.9800. Further rise should be seen to retest this 6.9800 high, as well as psychologically important 7 handle. Should trader war worsens, and barring any government intervention, USD/CNH should take out 6.9800 with relative ease. Next target will be 61.8% projection of 6.2354 to 6.9800 from 6.6699 at 7.1301.
Shanghai SSSE closed down -1.48% at 2850.95 today as fall from 3288.45 extends. For now, we’re just seeing such decline as at corrective move. Still, SSE will likely drop through 61.8% retracement of 2440.90 to 3288.45 at 2764.66 before slowing down.