IMF: Hi Yuan. Welcome to our SDR world.

Chinas-fate-750x437

After reading the article below, I decided to pen a few thoughts.

http://www.cnbc.com/2015/11/25/why-markets-see-next-week-as-among-most-important-of-year.html

The inclusion of the Yuan into the IMF SDR basket is is a very important issue to me. Personally, I refer to the IMF SDR currency basket pairs a lot in my trading. I want to see how the inclusion of the Yuan in the IMF basket will change things for the other pairs in that basket.

I wonder what will change in terms of mathematical equilibrium and imbalance among those four currencies after adding the fifth currency yuan and its unique variables. Where does one source historical data? Will one ignore the Yuan until it has sufficient past data to work previous mathematical formulas and models with?

A trading buddy of mine agrees that the RMB (remninbi) will be on a par with the Sterling and the Yen. We expect 10-15% Yuan weighting in the basket.

Historical data for trading purposes should be sufficiently available after a couple of days into its inclusion. Enough data to apply non-linear regression techniques (think slope, intercept, forecast functions in Excel) and confidence type boundary levels.

We also should keep an eye on correlation between SDR and the USD, being the currency that represents the biggest weight in the basket.

For those who wonder what the difference is between the remninbi and the Yuan, read this article: http://www.bbc.com/news/10413076

Do have a productive trading week ahead and remember, a trading loss is only a loss if you do not learn anything from your loosing trade.

Yours in the quest for success and significance,

Olufukeji “Ejimi”Adegbeye CWM

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