USDCNH and 10&30yr yields at resistance!

Correlation is not causation, however when you have such strong correlations in the market, you must take note of them. That is the case with the US treasury markets and the USDCNH. Although the markets are watching closely to see if the USDNCH breaks key resistance near the 7.3800 level, the bond market is carefully watching US yields to see if they break higher out of resistance as well. If you lay them on top of each other, you will notice the charts have a very strong correlation. That doesn’t mean if one breaks (higher) the other would as well. But if one does (yields or USD vs CNH), I sure would put the other (yields or USDCNH) on my immediate watchlist!

Blake Morrow

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Steve Voulgaridis