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The Urbanization of China and Your Forex Account
Written by: PaxForex analytics dept - Thursday, 08 March 2018 0 comments
China continues to metamorphose from an emerging economy dotted with villages and farm communities into a fully developed economy. Urbanization, the move from farmers into cities, is one key aspect of this transformation. Another milestone was reached after China’s most rural province, Henan, announced that 50.2% of its 96 million residents now live in urban centers as of the end of 2017. Henan is the third most populous province in China and is often called the ‘Granary of China’ because it produces roughly 10% of the Chinese food supply. At the end of 2016, 48.5% of residents in Henan lived in cities or towns and in 2003 that number stood at 31.0%.
Henan lagged the urbanization as compared to China and all its 22 provinces by six years which makes this milestone even more significant. Guangdong Province, which is the most urbanized province and adjacent Hong Kong, has an urban ratio of 70.0% and well above China’s total urban ratio of 59.0%. In comparison, the US has an urban ratio of 82.0% and Russia’s urban ratio is 74.0%. This shows that China has plenty of room to grow in order to catch up with developed economies, but it is well ahead of India which has an urban ratio of only 34.0%. China announced that it will further evaluate land ownership and land use in rural areas in order to manage migration and to boost growth further.
As China continues to evolve into a developed economy, more natural resources will be needed in order to built the required mega cities and infrastructure. This is expected to keep upward pressure on commodity prices over the long-term. Commodity exporters such as Australia, Canada and New Zealand should therefore continue to ride the Chinese urbanization wave higher. This will provide a floor under the currencies of those countries and forex traders need to keep that in mind. Bloomberg Economics Research Specialist Qian Wan stated that ‘Agricultural Henan crossing the threshold to become mainly urban is a reminder that China’s growth-boosting urban shift still has further to run.’
The Australian Dollar, the Canadian Dollar and the New Zealand Dollar stand to benefit from China’s urbanization and any dips in those currencies should be taken advantage of by forex traders with a longer time horizon. While volatility is set to increase throughout 2018 so will trading opportunities. Open your PaxForex Trading Account today and take advantage of the expert analysis provided on a daily basis which will help all clients boost their monthly earnings.
The head of the Rural Development Institute at the Chinese Academy of Social Sciences, Wei Houkai, told the Xinhua News Agency that ‘The employment market, civilization level and social welfare system will change fundamentally when urbanization is over 50 percent.’ China has a population of over 1.4 billion which means that further progress into urbanization will require plenty of investment. Demand for natural resources from China will continue to be elevated and forex traders can profit by trading the right currencies which are set to rise as a result. Here are three currency pairs for the urbanization of China and your forex account will be pipped alongside it.
Australia has been riding the Chinese wave for decades and benefited greatly from commodity exports to the world’s most populous nation. The AUDCHF has recently ended its move to the downside after confirming its new
horizontal support area. Following the confirmation, price action completed a breakout above this area which resulted in a momentum change from bearish to bullish. The path is now free of obstacles for the AUDCHF to advance until it can challenge its horizontal resistance area. Forex traders are recommended to wait for minor contractions and spread their buy orders between 0.7245 and 0.7325.
The CCI has spiked above 100 and is currently trading in extreme overbought conditions, but any minor dips in the AUDCHF will quickly correct this indicator into neutral territory. This would confirm attractive buying opportunities in the above mentioned entry area. Make a deposit into your PaxForex Trading Account today and enter this trade to your portfolio before it will accelerate to the upside.
The EURCAD rallied sharply following the breakout above its horizontal support area, but the move has now run out of steam as a new horizontal resistance area has emerged. Price action is in the process of confirming a top, with the last three candlestick formations indicating a trend reversal. A breakdown below the current horizontal resistance area will attract sell orders and initiate profit taking in this exhausted currency pair. Forex traders are advised to seek short entries inside the 1.5950 to 1.6120 zone in order to maximize profit potential and reduce risk.
The CCI is already in reversal mode after moving well above the 100 level, briefly approaching 300. A breakdown from extreme overbought conditions is set to further accelerate a contraction in the EURCAD. Forex traders should take advantage of the PaxForex Daily Fundamental Analysis where our expert analysts outline the most market moving fundamental aspects important to your forex trading day. Learn how to add over 500 pips of profits every month.
There will be volatility in commodity prices and a great hedge to the above bullish commodity trades is a short position in the GBPNZD. New Zealand is the smallest economy out of the three big exporters and set to feel any negative impact steeper than its peers. Price action already completed a breakout above its horizontal support area and is further being pressured to the upside by its ascending support level. More upside in this trade is anticipated and forex traders should seek to buy any dips in the GBPNZD down into its ascending support level.
The CCI, a momentum indicator, is trading in positive territory above the 0 mark and confirms good entry levels with bullish momentum. Any minor contraction in the GBPNZD is likely to maintain this indicator above the 0 level and in bullish territory. Follow the PaxForex Daily Forex Technical Analysis and profit from our expert analysts research and analysis into the best technical trade set-ups every trading day.