Yesterday, both the Chinese yuan and the US dollar index rose simultaneously.

Why?

Some consider this to be a very rare occurrence, and indeed, it is not common, but this time, it's not hard to explain.

To put it bluntly, this is the result of market manipulation.

How should we understand this?

On August 29th, the yuan and the US dollar both increased in value.

Yesterday, both offshore and onshore yuan appreciated against the US dollar, breaking through the 7.10 mark, with intraday gains exceeding 400 points and daily gains over 300 points.

This follows the offshore yuan erasing all its losses for the year in early August, and now the onshore yuan has also recovered its losses for the year.

The US dollar index also rose by 0.25% that day, closing at 101.344.

However, the index is struggling around 101, which is a very precarious position, and Goldman Sachs' report also believes that this level is hard to support.

In fact, if you look closely, you'll find that the yuan and the US dollar are on completely different trajectories, and you can't replace the long-term trend with a day's fluctuation.

Advertisement

Since the beginning of this year, after a long-term slow decline, the yuan has been on an upward trend since mid-July, with only minor fluctuations in between.

The US dollar is the exact opposite; since the end of June, despite minor fluctuations, it has been on a downward trend.

If you look at the US dollar index curve in the past two months, you'll see that it's struggling, and there's an important issue behind this.

This reflects the contrast in economic stability and trends between China and the US, as well as the strong intervention of the market by the expectation of US dollar interest rate cuts.

In layman's terms, China's economy is steadily improving, while the US economy is in chaos, with many economic data points that the market doesn't understand.

A lack of understanding leads to a lack of confidence.

This is the result of the US election year, where economic data is embellished or even falsified.

At the same time, in the past two months, the pressure of economic recession in the US has increased, and the expectation of US dollar interest rate cuts has continued to strengthen, sending a bearish signal to the US dollar.

So, why did the yuan and the US dollar rise simultaneously yesterday?

The answer is simple: it's a temporary fluctuation caused by short-term sudden factors.

The yuan's rise is due to the increased expectation of US dollar interest rate cuts, with the market widely believing that the US dollar will start to cut interest rates in September, caused by Chinese enterprises' concentrated currency settlement.

What is currency settlement?

Many of our enterprises earn US dollars in overseas markets, and because of the relatively high US dollar interest rates, they choose not to settle the currency for the time being but to deposit it in overseas banks to earn interest.

The currency settlement cycle usually does not exceed three months, so there is a time difference.

If the US dollar cuts interest rates, it will inevitably fall, and settling the currency later would result in a loss, so it's necessary to settle the currency in advance to avoid exchange rate losses.

A few days ago, a research director at Goldman Sachs said that the scale of Chinese enterprises' unsettled currency is about 300 billion US dollars, most of which need to be exchanged into yuan and returned to the country before the Federal Reserve's interest rate meeting on September 17th and 18th.

So, what about the rise of the US dollar?

Many people didn't notice that on August 29th, local time, the US Department of Commerce's Bureau of Economic Analysis released data showing that the US second-quarter real GDP was revised to a year-on-year increase of 3%, higher than the initial estimate of 2.8%.

At the same time, the US second-quarter personal consumption expenditure was revised to a year-on-year increase of 2.9%, and the core PCE price index increased by 2.8%.

These data show that the US economy is still strong, with strong consumer demand and controlled inflation, which has undermined confidence in the US dollar interest rate cuts in September.

Of course, these economic data actually have problems, please see our another special analysis content, which is not repeated here.

So, it may not cut interest rates in September, and the US dollar index rises, which is a temporary fluctuation and cannot change the long-term downward trend of the US dollar index.

In this way, the rise of the yuan and the US dollar is actually related to the big event of US dollar interest rate cuts.

The US often accuses other countries of manipulating exchange rates, such as listing Japan in the exchange rate manipulation monitoring list a few months ago.

In fact, the US itself is the most black exchange rate manipulator.

In the past two years, the Federal Reserve has violently raised interest rates, which is artificially changing the value of the US dollar, maintaining a strong US dollar, and maintaining the appearance of US economic prosperity.

Is it not manipulation for Japan to directly intervene in exchange rates, and is it not manipulation for the US to violently raise interest rates and forcibly change the value of the US dollar?

The US dollar exchange rate has almost been manipulated by Americans for a long time, and this manipulation has distorted the market and has also led the US dollar step by step into the abyss.

Because the more obvious the signs of manipulating exchange rates, the more people will be afraid of the US dollar and stay away from the US dollar.

Everyone is afraid of being harmed by you, and this kind of thing has happened many times.

In addition, because the US dollar is the world's currency, the consequences of manipulating the US dollar exchange rate are also more serious.

As the most widely used currency in the world, a very important point is to be freely convertible.

Now it has become how much the US dollar exchange rate is, who dares to exchange so many US dollars?

It's enough to be enough, and even better to avoid the US dollar.

The US dollar interest rate increase looks very good, and Americans have a lot of say, and they can do whatever they want.

But you let everyone use the US dollar, and let everyone be afraid of the US dollar, which is actually digging their own grave.

So, the demons made by Americans are destroying the foundation of the US dollar.