USDCNH Trading Features
Your future success directly depends on the choice of trading instrument, namely the currency pair.
The world's top currencies by turnover combine to form the most popular Forex currency pairs, which offer low commissions and are in high demand in the foreign exchange market.
Naturally, novice traders tend to resort to instruments they've only heard of, even if only vaguely.
While these assets are certainly among the leaders for good reason, that doesn't mean they're the easiest to analyze or trade.
Unfortunately, the huge demand for the main instruments creates a multitude of influencing factors, making them difficult to predict.
The USDCNH currency pair is represented by the two strongest global economies at the moment, namely the United States and China.
While the United States holds the honorable first place in the list of the most powerful economies, China is gradually moving into the honorable second place, making them two key global players in global markets.
However, despite the components of the national currencies of two economic giants, this currency pair is one of the exotic instruments and has a number of features in forecasting and movement.
So, to understand which factors can influence a given currency pair, we suggest familiarizing yourself with the key features of each instrument individually.
Fundamental features of the currencies that form USDCNH.
USD The dollar is the national currency of the United States of America and the world's most traded currency. The dollar's exchange rate can be influenced by both domestic economic factors and foreign political ones.
When it comes to internal factors that significantly 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 related to it, and the interest rate.
Regarding political factors, statements by key political figures have a strong influence. For example, we observed intense market volatility around the world during the inauguration of the new US president.
The dollar exchange rate is also influenced by prices on commodity markets, since, as the largest industrial economy, the United States purchases a lot of oil, which undoubtedly has one of the most pressing budget items in this country.
yuan (CNY) is the national currency of China. China is currently home to all major global corporations, as its dense population allows them to maintain the lowest labor costs.
Naturally, low wages have created a huge influx of companies, with even the largest US corporations successfully relocating factories to China. The Chinese yuan is regulated by the actions of the Chinese National Bank, which actively intervenes in the market.
It's worth noting that the CNY can be considered a managed currency pair, as the National Bank provides two prices daily, which represent the instrument's range of movement. If the price exceeds these limits, the National Bank adjusts the exchange rate through regulatory measures.
Since the Chinese economy ranks a respectable second in the global rankings, the yuan exchange rate is strongly influenced by commodity prices, namely oil, gas, metals, and others.
The CNY exchange rate can also be influenced by the release of macroeconomic statistics, including interest rates, GDP, the trade balance , production volumes, and industrial output.
The USDCNH currency pair is in high demand, as the world's largest corporations constantly purchase yuan for dollars to pay Chinese labor. The currency pair itself is highly volatile and has a very low pip value.
However, it's important to understand that USDCNH is not suitable for day trading due to its high spread, and it should be approached with caution when trading long-term, as this instrument carries a very high swap rate .
