Features of trading USDCNH
Your future success directly depends on the choice of a trading instrument, namely a currency pair.
The world's top currencies by turnover are combined into the most popular currency pairs on Forex, which have low commissions and are in huge demand in the foreign exchange market.
Naturally, novice traders try to resort to tools that they have heard of, even if only half-heartedly.
Of course, it is not for nothing that these assets became leaders, but this does not mean that they are the ones that are easy to analyze and the easiest to trade.
Unfortunately, the huge demand for major instruments gives rise to many influencing factors, which makes these instruments difficult to predict.
The USDCNH currency pair is represented by the two strongest world economies at this stage, namely the USA and China.
If the United States honorably takes first place in the list of the strongest economies, then China is gradually moving to an honorable second place, which makes them two of the world's key players in world markets.
However, despite the components of the national currencies of the two economic giants, this currency pair is one of the exotic instruments and has a number of features in forecasting and movement.
So, in order to understand what factors can affect a given currency pair, we suggest getting acquainted with the key features of each instrument separately.
Fundamental features of the currencies forming USDCNH.
USD is the national currency of the United States of America, which ranks first in the world in terms of turnover. The dollar exchange rate can be influenced by both internal economic factors and external political ones.
If we talk about internal factors that greatly influence the dollar exchange rate, we can highlight macroeconomic indicators, such as GDP, trade balance, external and internal debt, as well as unemployment and everything connected with it, interest rates.
If we talk about political factors, we can note the strong influence of statements by key political figures. As an example, one could observe a strong fever in markets around the world at the time of the inauguration of the new US President.
The dollar exchange rate is also affected by prices on commodity markets, since, being the largest industrial economy, the United States buys a lot of oil, which undoubtedly has one of the most upset budget items in this country.
CNH is the national currency of China.
Today, China is the home of all the world's major corporations, since the dense population of this country allows corporations to have the lowest labor costs. Naturally, low wages created a huge influx of companies, and even the largest US corporations successfully moved factories to this country.
The Chinese yuan is regulated through the actions of the country's National Bank, which actively enters the market with interventions. It is worth noting that CNH can be classified as a regulated currency pair, since every day the national bank of the country provides two prices, which are the range of movement of the instrument, and if the price goes beyond the boundaries, with the help of regulatory measures, the national bank adjusts the rate.
Since the Chinese economy occupies a respectable second place in the world ranking, the yuan exchange rate is strongly influenced by prices in commodity markets, namely oil, gas, metals and others.
Also, the CNH rate may be influenced by the release of macroeconomic statistics, namely the interest rate, GDP, trade balance , production and industrial volumes.
The USDCNH currency pair is in great demand, since the world's largest corporations are constantly purchasing yuan for dollars to pay the Chinese workers.
The currency pair itself has high volatility and a very low value per pip. However, it is worth understanding that USDCNH is not suitable for intraday trading due to the high spread, and you should also be careful when trading long-term, since there is a very high Swap for this instrument .