From October to now, there has been no significant improvement in liquidity (blue line), but the currency price has jumped from 60k to 90k. This indicates that the price increase is mainly driven by the election.
1/ Suppressed by uncertainty before the election
2/ Emotions released after the election due to the obvious Favourable Information brought by the policies
So now we are probably at the stage where emotions have been released, but liquidity has not caught up, and we are in a period of consolidation/correction.
The next step is still to look at liquidity and sentiment. From the perspective of liquidity, TGA is expected to spend about 14 billion yuan according to the Ministry of Finance’s plan, which is considered a small positive. The majority is estimated to be spent when the national debt reaches its peak in January.
There are some challenges behind the emotional aspect, mainly related to inflation/government debt. The probability of interest rate cut in December is currently only expected to be 58%. So let’s closely monitor inflation and economic figures in the future.
Conclusion: There is a lot of uncertainty from now until January, it may rise, perhaps trade sideways, and maybe fall.
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