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Is a 3% decline for a currency in a couple of months, enough of a decline? The left chart reflects that the Chinese Yuan to the U.S. Dollar started falling two months ago and its been a hard and swift decline, to say the least. Do the currency players know something most of the world doesn’t seem to know or is this just noise?
From a technical point of view, the Shanghai index is in a very vulnerable position in the right chart above. Should support break, this already weak index could get much weaker.
China represents one sixth of the worlds population. Some feel the Fed (Ben/Janet show) has been able to prop up the markets in the states. Can Janet keep things afloat in China too? Could weakness in China spill over into Europe and the United States markets and impact portfolio construction here?