Weekly Currency Review: USD Grasps Big Win In Trade War Against China
US dollar beats Chinese yuan amid escalating tensions
USD/CNY continues its hike, fueled by escalating tensions emanating from the heated US-China trade war. Early this week, USD/CNY reached 6.9 and the ratio remains comfortably in that vicinity. USD/CNY increased by 1.41% in the 7-day range of last week’s forecast, as correctly predicted by I Know First’s algorithm.
Tensions evidenced by tariffs and policies targeting Huawei seem to be swaying in the US’s favor. In retaliation for the $200 billion tariff on China proposed by the US, China has promised a $60 billion one of its own. Moreover, global equities are stumbling from US blows to Huawei, as Huawei is forbidden from purchasing US parts for its products, unless approved by very unlikely licenses. Last week, in fact, the yuan plummeted to a new five-month low against the dollar.
Among such volatility, investors looking for stable gains are returning to the US dollar, which has established itself as somewhat of a safe-haven currency. With 10-Year Treasury note yields rebounding and stabilizing, the dollar will continue to remain attractive. Investors can expect this volatility— clearly favorable to the dollar — to continue at the very least into the next G20 summit in late June, which would be the earliest opportunity for ameliorative Trump-Xi dialogue.
Euro and Pound struggle among political anxiety in Europe
With Prime Minister Theresa May’s likely resignation impending, the Brexit gloom continues to dominate the Pound, which has found a four-month low after steady decline since January. Anxiety stemming from deteriorating cross-party compromises continue to push the pound on a downward slope. GBP/USD has seen a -2.16% change in the 7-day range of our forecast, as correctly predicted by I Know First’s algorithm.
In the rest of the continent, European Parliamentary elections set for May 23-26 are stirring nerves. The trend is exemplified by Deputy Prime Minister of Italy Matteo Salvini, who pronounced dissatisfaction with the European Union. His claim that he would “tear apart” rules that are “strangling” Italy if his party would to garner favorable results in the election has the market nervous, and such political volatility can be expected to continue to shake the Euro.
Rise in Australian dollar stagnates as central bank hints at lower interest rates
While the Australian dollar saw an impressive rise of 0.6% on the day the country’s conservative (and more pro-business) party took the federal election in a shocking win, its gain was cut short with a 0.25% decline when Reserve Bank of Australia Governor Philip Lowe signaled that the central bank was considering cutting interest rates in June. AUD/USD shifted -1.89% in the 7-day range of our forecast, as correctly predicted by I Know First’s algorithm.
I Know First currency forecast, 71.15% hit ratio
Algorithmic Currency Forecast: The table on the left is the forex forecast for the forex outlook produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. Note that the top 52 currencies in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant currencies have been included. The boxes are arranged according to their respective signal and predictability values (see below for detailed definitions). A green box represents a positive forecast, suggesting a long position, while a red represents a negative forecast, suggesting a short position.
Forecast Performance: The table on the right compares the actual currency performance with I Know First’s prediction. The column titled “Forecast” shows which direction the algorithm predicted, and the column “% Change” shows the actual currency’s performance over the indicated time period. The “Accuracy” column shows a “v” if the algorithm correctly predicted the direction of the stock or an “x” if the forecast was incorrect. The “I Know First Hit Ratio” represents the algorithm’s accuracy when predicting the trend of the currency.
Signal: This indicator represents the predicted movement direction/trend; not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price.
Predictability: This value is obtained by calculating the correlation between the current prediction and the actual asset movement for each discrete time period. The algorithm then averages the results of all the prediction points, while giving more weight to recent performance. As the machine keeps learning, the values of P generally increase.
Algorithmic traders utilize these daily forecasts by the I Know First market prediction system as a tool to enhance portfolio performance, verify their own analysis and act on market opportunities faster. This forecast was sent to current I Know First subscribers.
Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.
