USD/CNH –Take advantage of higher volatility for bigger trading profit
On the 6th of Jan 2020, we will be adding USD/CNH to our list of currency pairs for clients to trade. Below, we have written a short article on USD/CNH in order to aid and jump start your trading in this currency pair.
The Difference
between USD/CNY and USD/CNH
First what is USD/CNH currency pair and its difference from the USD/CNY. The CNY is the official exchange rate between
China’s Yuan and the USD. The People’s Bank of China, which is China’s central
bank, fixes the mid-rate in the morning at 9am. The CNY is allowed to fluctuate
against the US dollar but only within an upper band and a lower band.
The CNH is the deliverable offshore Yuan exchange rate against the US dollar. It was started in 2010 to cater to offshore demand for the Renminbi. Its rate usually differs from the CNY as demand for the offshore Yuan is usually greater than its supply.
USD/CNH Trading Characteristics
This pair is traded 24 hours around the clock and its hourly range is quite evenly distributed around the clock. Below is a chart of the hourly pip movement.
The time is based on GMT timing. We can see that there are 3 time periods where the range peaks around 75 pips but half the day, the hourly range is more than 50 pips. As a gauge, GBP/USD range on typical day is about 25 pips while the EUR/USD highest hourly range is 15 pips. USD/CNH has the volatility to interest day traders as well as long term traders. In the month of December 2019, the high in USD/CNH is 7.0867 while the low was 6.92. That is a month range of 0.1667! (Source: UOBKH MT4 data)
Trading Requirement
This USD/CNH pair will be traded over the MT4 trading platform. The standard contract size is US$100,000. We do offer micro lot sizes from 10,000 onwards. The margin requirement is 5% of contract size. The typical spread is 4-5 pips depending on the time of the day.
For swaps, holders of short position, there is no charge but for clients who hold a long position, there will be a 2.7 pips payment. This swap rate is indicative only and swaps can vary from day to day. Over the weekend, swap will be charged from Saturday to Sunday. Weekend swaps rollover is usually three times of the normal daily rate.
For clients who are interested to trade USD/CNH with UOB Kay Hian
Our offering
We offer a tight spread, one of the best in the market on the USD/CNH pair. As the largest broker in Singapore, we offer fast execution with our larger liquidity pool ensuring fills for both big and small size traders as well as scalpers. Our Straight-Through-Processing model ensures there is no conflict of interest between clients and ourselves. As a STP broker, we do not take the opposite of our clients. All clients’ orders are passed on to our liquidity providers, which are all top tier 1 banks.