USD/CNY Fundamental Analysis – December 9, 2015 -Forecast

usdcny tuesday bnsAnalysis and Recommendation:

The USD/CNY added 96 points as the Chinese currency fell after lackluster trade numbers with exports printing well below forecast. The CNY is trading at 6.4178. The onshore yuan weakened 0.2 percent to a four-year low of 6.4182. China’s foreign-exchange reserves declined last month as the central bank sold dollars to prop up the local currency ahead of approval from the IMF for the yuan to be included in its basket of reserve currencies. The currency hoard dropped by $87.2 billion to $3.44 trillion at the end of November, from $3.53 trillion a month earlier, according to People’s Bank of China data, extending this year’s decline to $405 billion.

The decrease in exports was larger than a median forecast of a 3.2 percent decline in a Bloomberg News survey of economists. Last month’s drop in exports was bigger than the 3.6 percent slide in October. The trade surplus narrowed to 343.1 billion yuan ($53.5 billion) in November from the previous month’s 393.2 billion yuan.

A report published on Sunday showed that despite efforts made by the government to prop up sagging economic growth, plunging imports highlight the country’s continued economic woes.
Slowing economic growth in China has had a massive impact on heavy industries like steelmaking and power generation, leading to a slump in demand for bulk commodities like iron ore and coal.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  JPY

 

Adjusted Current Account

1.49T

1.53T

0.78T

 

 

  JPY

 

Current Account n.s.a. (Oct)

1.458T

1.659T

1.468T

 

 

  JPY

 

GDP (YoY) (Q3)

-0.8%

-0.2%

-1.2%

   

  JPY

 

GDP (QoQ) (Q3)

-0.2%

-0.1%

-0.3%

   

  GBP

 

BRC Retail Sales Monitor (YoY) (Nov)

-0.4%

0.4%

-0.2%

 

 

  AUD

 

NAB Business Confidence (Nov)

5

 

2

 

 

  CNY

 

Exports (YoY) (Nov)

 -6.8%

-5.0%

-6.9%

 

 

  CNY

 

Imports (YoY) (Nov)

 -8.7%

-12.6%

-18.8%

 

 

  CNY

 

Trade Balance (Nov)

 54.10B

63.30B

61.64B

 

 

 usdcny2

Upcoming Economic Events that you should be monitoring:

Wednesday, December 9, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  USD

 

API Weekly Crude Oil Stock

 

 

1.600M

 

 

  AUD

 

Westpac Consumer Sentiment

 

 

3.9%

 

 

  AUD

 

Home Loans (MoM) (Oct)

 

-1.0%

2.0%

 

 

  CNY

 

CPI (MoM) (Nov)

 

-0.1%

-0.3%

 

 

  CNY

 

CPI (YoY) (Nov)

 

1.4%

1.3%

 

 

  CNY

 

PPI (YoY) (Nov)

 

-5.9%

-5.9%

 

 

  EUR

 

German Trade Balance (Oct)

 

20.0B

19.4B

 

 

  USD

 

Crude Oil Inventories

 

 

1.177M

   

Government Bond Auctions

Date Time Country

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

 

 

USD/CNY Fundamental Analysis – December 8, 2015 -Forecast

usdcny monday bnsAnalysis and Recommendation:

The USD/CNY is flat this morning at 6.4011 after gaining last week as the US dollar regained its footing after its sharp decline after the decision of the ECB sent the greenback down 100 points. This week, the focus will switch to an avalanche of Chinese data which are expected to show a sluggish economy. Trade figures are due on Tuesday, followed by inflation on Wednesday and industrial output and retail sales on Saturday.

The People’s Bank of China (PBOC) set the midpoint rate at 6.3985 per dollar prior to market open, 0.21 per cent weaker than the previous fix 6.3851, the lowest since late August. The spot market opened at 6.4021 per dollar and was changing hands at 6.4085 at midday, 0.1 per cent weaker than the previous close.

All but one of the primary dealers, brokerages that deal directly with the US Federal Reserve, believe the Fed is going to raise rates at the end of its Dec 16 meeting, according to a Reuters poll. The IMF announced on Nov 30 that it would include the yuan in its Special Drawing Rights (SDR) basket, an important milestone in China’s integration into global finances.

Hours after the IMF announcement, China’s central bank said there was no basis for the yuan to continue to devalue, and it would keep the currency basically stable as it would intervene in the market when there were abnormal international payments or capital moves.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  AUD

 

ANZ Internet Job Ads (MoM) (Nov)

1.4%

 

0.3%

 

 

  AUD

 

ANZ Job Advertisements (MoM)

1.3%

 

0.3%

   

  AUD

 

ANZ Newspaper Job Ads (MoM) (Nov)

-4.3%

 

3.0%

 

 

  JPY

 

BoJ Governor Kuroda Speaks  

 

 

 

 

 

  JPY

 

Coincident Indicator (MoM)  

 

 

-0.3%

 

 

  JPY

 

Leading Index  

 

102.9

101.6

 

 

 usdcny

Upcoming Economic Events that you should be monitoring:

Tuesday, December 8, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  GBP

 

BRC Retail Sales Monitor (YoY) (Nov)

 

0.5%

-0.2%

 

 

  AUD

 

NAB Business Confidence (Nov)

 

 

2

 

 

  CNY

 

Exports (YoY) (Nov)

 

-5.0%

-6.9%

 

 

  CNY

 

Imports (YoY) (Nov)

 

-12.6%

-18.8%

 

 

  CNY

 

Trade Balance (Nov)

 

63.30B

61.64B

 

 

  EUR

 

EU Finance Ministers Meeting  

 

 

 

 

 

  GBP

 

Industrial Production (MoM) (Oct)

 

0.1%

-0.2%

 

 

  GBP

 

Manufacturing Production (MoM)

 

-0.1%

0.8%

 

 

  EUR

 

GDP (QoQ) (Q3)  

 

0.3%

0.3%

 

 

  EUR

 

GDP (YoY) (Q3)  

 

1.6%

1.6%

 

 

  CAD

 

Housing Starts (Nov)

 

195.0K

198.1K

 

 

  CAD

 

Building Permits (MoM) (Oct)

 

2.9%

-6.7%

 

 

  GBP

 

NIESR GDP Estimate

 

 

0.6%

 

 

  USD

 

JOLTs Job Openings (Oct)

 

5.590M

5.526M

 

 

  CAD

 

BoC Gov. Poloz Speaks  

 

 

     

Government Bond Auctions

Date Time Country

Dec 07 13:00 Norway Details bond auction on 09 Dec

Dec 07 17:30 Italy Announces details of BTP/CCTeu on 11 Dec

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

 

 

USD/CHY Weekly Fundamental Analysis, December 7 – December 11, 2015 – Forecast

YuanWeekly Analysis and Recommendations:

USDCNY Close 6.4432, -0.0044, -0.07%

The USD/CNY traded mixed last week before finishing slightly lower. Each large sell-off was met with a strong rebound rally, suggesting trader indecision. Technical factors contributed to some of the price action because the market did test a major 50% level, or the balance point between the August high and the October low. Trader reaction to 6.4540 will likely determine the direction of the market from a technical perspective. 

Fundamentally, the driving force for the choppy price action was a surprise from the ECB, hawkish comments from Fed Chair Janet Yellen, and a stronger-than-expected U.S. Non-Farm Payrolls report.

In other news, the Caixin/Markit Purchasing Managers’ Index (PMI) for November fell to 51.2 from October’s three-month high of 52. In September, the index hit a 14-month low of 50.5. A number above 50 indicates activity is expanding while one below that level indicates a contraction.

The December 3 report was also remarkably weaker than the government’s reading and comes on the heels of more downbeat factory data released on December 2, the official services PMI for November rose to 53.6 from October’s 53.1 while the final Caixin/Markit manufacturing PMI contracted for the ninth straight month in November.

This week, the news will be heavily weighted by economic events from China. These include a Trade Balance report that is expected to increase from 393B to 395B. Chinese consumer prices are expected to come in at 1.4%, up from 1.3%. Producer prices are expected to remain steady at -5.9%.

U.S. Retail Sales on December 11 are expected to rise 0.2%. The week ends with Industrial Production and Fixed Asset Investment reports from China.

Look for more sideways price action this week as investors try to work out bullish technical and fundamental factors that could drive the market above 6.4540 and the impending U.S. interest rate hike on December 16. The trigger for volatility will be the Chinese economic reports. Bearish news will be supportive for the USDCNY. Bullish news from China could encourage investors to sell against 6.4540. 

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which cover the current week and are published by Sunday before the new week begins. Daily as the markets close we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Weekly USD/CNY
Weekly USD/CNY

Major Economic Events for the week:

        Date                   Time         Curr                                            Events                                                            Forecast  Previous

Mon Dec 7

 Tentative

CNY

 

Trade Balance

   

395B

393B

 

Tue Dec 8

10:00am ET

USD

 

JOLTS Job Openings

   

5.59M

5.53M

 
 

8:30pm ET

CNY

 

CPI y/y

   

1.4%

1.3%

 
   

CNY

 

PPI y/y

   

-5.9%

-5.9%

 

Wed Dec 9

10:30am ET

USD

 

Crude Oil Inventories

     

1.2M

 

Thu Dec 10

8:30am ET

USD

 

Unemployment Claims

   

266K

269K

 
   

USD

 

Import Prices m/m

   

-0.8%

-0.5%

 

Fri Dec 11

8:30am ET

USD

 

Core Retail Sales m/m

   

0.3%

0.2%

 
   

USD

 

PPI m/m

   

0.0%

-0.4%

 
   

USD

 

Retail Sales m/m

   

0.2%

0.1%

 
   

USD

 

Core PPI m/m

   

0.2%

-0.3%

 
 

10:00am ET

USD

 

Prelim University of Michigan Consumer Sentiment

   

92.3

91.3

 

Sat Dec 12

12:30am ET

CNY

 

Industrial Production y/y

   

5.7%

5.6%

 
   

CNY

 

Fixed Asset Investment ytd/y

   

10.1%

10.2%

 

 

Upcoming Government Bond Auctions

Date Time Country

Dec 07 13:00 Norway Details bond auction on 09 Dec

Dec 07 17:30 Italy Announces details of BTP/CCTeu on 11 Dec

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

USD/CNY Fundamental Analysis – December 7, 2015 – Forecast

usdcny friday bnsAnalysis and Recommendation:

The USD/CNY tumbled 8 points as the greenback tumbled after a surprise from the ECB and comments from Janet Yellen on Thursday. Traders are preparing today’s jobs data. The U.S. dollar dived broadly on Thursday after the European Central Bank (ECB)’s stimulus measures fell short of market expectations.

The ECB announced on Thursday a cut in the rate of its key interest rate from negative 0.2 percent to a negative 0.3 percent, missing expectations of a more aggressive loose monetary policy. Meanwhile, the central bank would extend quantitative easing by six months until at least March 2017 at the current rate of 60 billion euros a month. Following the announcement, euro climbed to a one-month high against the dollar. The dollar index, which measures the greenback against six major peers, was down 2.1 percent at 97.8 in late trading.

Earlier this week, the IMF announced that the RMB will, starting October 1, 2016, be one of five currencies included in the basket of currencies in the Special Drawing Rights (SDR) of the Fund. This is a signal that the currency is now one of only five internationally accepted currencies.

The value of the SDR will be based on a weighted average of the values of the basket of currencies. These are the US dollar (42 per cent), the pound sterling (8 per cent), the Japanese yen (8 per cent), the Chinese renminbi (11 per cent) and the euro (31 per cent).

The Caixin/Markit Purchasing Managers’ Index (PMI) for November fell to 51.2 from October’s three-month high of 52. In September, the index hit a 14-month low of 50.5. A number above 50 indicates activity is expanding while one below that level indicates a contraction.

Thursday’s report was also remarkably weaker than the government’s reading and comes on the heels of more downbeat factory data.Released on Wednesday, the official services PMI for November rose to 53.6 from October’s 53.1 while the final Caixin/Markit manufacturing PMI contracted for the ninth straight month in November.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  AUD

 

Retail Sales (MoM) (Oct)

0.5%

0.5%

0.4%

   

 usdcny

Upcoming Economic Events that you should be monitoring:

Friday, December 7, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  EUR

 

German Industrial Production (MoM)

 

0.8%

-1.1%

 

 

  EUR

 

Eurogroup Meetings  

 

 

 

   

Government Bond Auctions

Date Time Country

Dec 07 13:00 Norway Details bond auction on 09 Dec

Dec 07 17:30 Italy Announces details of BTP/CCTeu on 11 Dec

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

 

 

USD/CNY Fundamental Analysis – December 4, 2015 – Forecast

usdcny thursday bnsAnalysis and Recommendation:

The USD/CNY gained 1 point to trade at 0.6.3989 as the greenback rallied in the morning session after Janet Yellen more or less said that a rate increase was a fore sure thing in December but economic data this month could actually trigger a larger increase. The US dollar rose to the strongest in more than a decade after Federal Reserve chair Janet Yellen said the US economy is ready for an interest-rate increase, echoing her central bank colleagues before they gather in two weeks.

The US currency strengthened against most of its major peers as Ms. Yellen said a belated tightening in monetary policy may “inadvertently push the economy into recession”, while Fed Bank of Atlanta president Dennis Lockhart said he favors raising interest rates this month for the first time in almost a decade. The dollar pared gains versus the euro in afternoon trading, as investors await the outcome of the European Central Bank meeting on Thursday

The Caixin/Markit Purchasing Managers’ Index (PMI) for November fell to 51.2 from October’s three-month high of 52. In September, the index hit a 14-month low of 50.5. A number above 50 indicates activity is expanding while one below that level indicates a contraction.

Thursday’s report was also remarkably weaker than the government’s reading and comes on the heels of more downbeat factory data. Released on Wednesday, the official services PMI for November rose to 53.6 from October’s 53.1 while the final Caixin/Markit manufacturing PMI contracted for the ninth straight month in November.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  USD

 

FOMC Member Williams Speaks 

 

 

 

 

 

  AUD

 

HIA New Home Sales (MoM)

-3.0%

 

-4.0%

 

 

  AUD

 

Trade Balance (Oct)

-3.305B

-2.665B

-2.403B

   

  CNY

 

Caixin Services PMI (Nov)

51.2

53.1

52.0

 

 

 usdcny

Upcoming Economic Events that you should be monitoring:

Friday, December 4, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  AUD

 

Retail Sales (MoM) (Oct)

 

0.5%

0.4%

 

 

  USD

 

Nonfarm Payrolls (Nov)

 

200K

271K

 

 

  USD

 

Unemployment Rate (Nov)

 

5.0%

5.0%

 

 

  EUR

 

ECB President Draghi Speaks  

 

 

     

Government Bond Auctions

Date Time Country

Dec 03 10:30 Spain 1.15% Jul 2020 Bono

Dec 03 10:50 France

Dec 03 11:03 Sweden Sek 0.7bn 1%

Dec 07 13:00 Norway Details bond auction on 09 Dec

Dec 07 17:30 Italy Announces details of BTP/CCTeu on 11 Dec

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

 

 

USD/CNY Monthly Fundamental Forecast – December 2015

usdcny monthly bnsOutlook and Recommendation

The USD/CNY officially became a reserve currency as the IMF announced its decision at the end of the month. The yuan has had a difficult time as the Chinese stock exchange continues to see turmoil and manufacturing remained weak throughout the month. December will open with manufacturing PMI which is expected to continue to show contraction in the sector and traders are beginning to think that China will not reach its 7% growth target. The renminbi opened December at 6.3982 down 1.27% on the month against the greenback.

The Chinese renminbi was anointed as one of the world’s elite currencies on Monday, a milestone decision by the International Monetary Fund that underscores the country’s rising financial and economic heft.

The move will help pave the way for broader use of the renminbi in trade and finance, securing China’s standing as a global economic power. Just four other currencies — the dollar, the euro, the pound and the yen — have the I.M.F. designation.

But the path to the I.M.F. decision, a bumpy process that stretches back years, also introduced new uncertainty into China’s economy and financial system.

To meet the I.M.F. requirements, China was forced to give up some of its tight control over the currency, culminating in the abrupt devaluation of the renminbi that shook global markets in August. The changes could inject fresh volatility into the country, at a time when its economy is already slowing.

The Chinese yuan (CNY) ended November with a remarkable 0.6% gain on the 30th with a move that appeared to exhibit signs considerable influence on the part of official players. The CNY gains came ahead of the highly anticipated IMF SDR announcement, with expectations of a formal endorsement of the yuan as a reserve currency.

Additional monetary stimulus will underpin China’s economic performance over the coming months. In October, the People’s Bank of China lowered the one-year benchmark loan and deposit interest rates by 25 basis points (bps) to 4.35% and 1.5%, respectively, marking the sixth cut since November 2014

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which cover the current week and are published by Sunday before the new week begins. Daily as the markets close we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

usdcny m

Major Economic Events That Will Affect The Markets In December

 

Cur.

   

Event

 

 

 

 

 

Tuesday, December 1, 2015

 

  CNY

 

Manufacturing PMI (Nov)

 

 

 

 

 

 

  CNY

 

Caixin Manufacturing PMI (Nov)

 

 

 

 

 

 

  AUD

 

Interest Rate Decision (Dec)

 

 

 

 

 

 

  AUD

 

RBA Rate Statement  

 

 

 

 

 

 

  EUR

 

German Manufacturing PMI

 

 

 

 

 

 

  EUR

 

German Unemployment Change

 

 

 

 

 

 

  GBP

 

BoE Gov. Carney Speaks  

 

 

 

 

 

 

  GBP

 

Manufacturing PMI (Nov)

 

 

 

 

 

 

  USD

 

ISM Manufacturing PMI (Nov)

 

 

 

 

 

Wednesday, December 2, 2015

 

  AUD

 

GDP (QoQ) (Q3)

 

 

 

 

 

 

  GBP

 

Construction PMI (Nov)

 

 

 

 

 

 

  EUR

 

CPI (YoY) (Nov)  

 

 

 

 

 

 

  USD

 

ADP Nonfarm

 

 

 

 

 

 

  USD

 

Fed Chair Yellen Speaks  

 

 

 

 

 

Thursday, December 3, 2015

 

  GBP

 

Services PMI (Nov)

 

 

 

 

 

 

  EUR

 

Interest Rate Decision

 

 

 

 

 

 

  EUR

 

ECB Press Conference  

 

 

 

 

 

 

  USD

 

Yellen Testifies  

 

 

 

 

 

Friday, December 4, 2015

 

  AUD

 

Retail Sales (MoM) (Oct)

 

 

 

 

 

 

  USD

 

Nonfarm Payrolls (Nov)

 

 

 

 

 

 

  USD

 

Unemployment Rate

 

 

 

 

 

 

  EUR

 

ECB President Draghi 

 

 

 

 

 

Tuesday, December 8, 2015

 

  CNY

 

Trade Balance (Nov)

 

 

 

 

 

 

  GBP

 

Manufacturing Product

 

 

 

 

 

Wednesday, December 9, 2015

 

  CNY

 

CPI (YoY) (Nov)

 

 

 

 

 

 

  NZD

 

Interest Rate Decision

 

 

 

 

 

Thursday, December 10, 2015

 

  AUD

 

Employment Change

 

 

 

 

 

 

  GBP

 

Interest Rate Decision

 

 

 

 

 

Friday, December 11, 2015

 

  USD

 

Core Retail Sales (MoM)

 

 

 

 

 

 

  USD

 

PPI (MoM) (Nov)

 

 

 

 

 

 

  USD

 

Retail Sales (MoM) (Nov)

 

 

 

 

 

Saturday, December 12, 2015

 

  CNY

 

Industrial Production

 

 

 

 

 

Sunday, December 13, 2015

 

  JPY

 

Tankan Large

 

 

 

 

 

 

  JPY

 

Tankan Large Non-

 

 

 

 

 

Tuesday, December 15, 2015

 

  GBP

 

CPI (YoY) (Nov)

 

 

 

 

 

 

  EUR

 

German ZEW Economic

 

 

 

 

 

Wednesday, December 16, 2015

 

  EUR

 

German Manufacturing

 

 

 

 

 

 

  GBP

 

Claimant Count Change

 

 

 

 

 

 

  EUR

 

CPI (YoY) (Nov)

 

 

 

 

 

 

  USD

 

Fed Interest Rate

 

 

 

 

 

 

  NZD

 

GDP (QoQ) (Q3)

 

 

 

 

 

Thursday, December 17, 2015

 

  EUR

 

German Ifo Business

 

 

 

 

 

 

  GBP

 

Retail Sales (MoM) (Nov)

 

 

 

 

 

Thursday, December 24, 2015

All Day

 

Holiday

Germany – Christmas Eve

 

 

Holiday

United States – Christmas Eve – Early close at 13:30

                     

 

 

USD/CNY Fundamental Analysis – December 2, 2015 – Forecast

usdcny tuesday bnsAnalysis and Recommendation:

The USD/CNY gained 5 points even after weak Chinese manufacturing PMI hit the wires. The Rimini was supported by the declining US dollar. Chinese official PMI missed forecasts while the Caixin (HSBC) report showed a small improvement balancing the markets. The private report only looks at small to medium size businesses while the official report takes into account all larger manufacturing companies.  The pair is trading at 6.3987. China’s factory activity slowed in November as domestic and international demand remains sluggish while winter is normally a slack season for production.

China’s manufacturing purchasing mangers’ index (PMI) came in at 49.6 in November, down from 49.8 in October, according to data released on Tuesday by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. A reading above 50 indicates expansion, while that below 50 represents contraction.

Yesterday the IMF officially added the CNY to its basket of currencies beginning in October 2016.

The Chinese yuan traded at the offshore rate edged higher on Monday after the International Monetary Fund decided to add the currency, also known as the renminbi, to its Special Drawing Rights basket.

Anointing the yuan as a reserve currency is in part a simple acknowledgment of China’s economic heft: The country now accounts for more than 15% of the global gross economic output, nearly triple what it was a decade ago.

And for the Chinese, the yuan’s higher status is part of a larger strategy to boost the country’s economic leverage. The government has ramped up lending to foreign governments, greatly expanded trade settled in yuan and created emergency credit facilities for other governments. Earlier this year, it launched the Asian Infrastructure Investment Bank, an institution analysts say was designed in part to rival the Washington-based World Bank.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  AUD

 

Building Approvals (MoM) (Oct)

3.9%

-2.3%

2.3%

   

  AUD

 

Current Account (Q3)

-18.1B

-16.5B

-20.5B

   

  JPY

 

BoJ Governor Kuroda Speaks  

 

 

 

 

 

  CNY

 

Manufacturing PMI (Nov)

49.6

49.8

49.8

 

 

  CNY

 

Non-Manufacturing PMI (Nov)

53.6

 

53.1

 

 

  CNY

 

Caixin Manufacturing PMI (Nov)

48.6

48.3

48.3

 

 

  CNY

 

Caixin Services PMI (Nov)

 

53.1

52.0

 

 

  AUD

 

Interest Rate Decision (Dec)

2.00%

2.00%

2.00%

 

 

  AUD

 

RBA Rate Statement  

 

 

 

   

 usdcny m

Upcoming Economic Events that you should be monitoring:

Wednesday, December 2, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  AUD

 

GDP (QoQ) (Q3)

 

0.7%

0.2%

 

 

  AUD

 

GDP (YoY) (Q3)

 

2.3%

2.0%

 

 

  USD

 

FOMC Member Brainard Speaks 

 

 

 

 

 

  GBP

 

Construction PMI (Nov)

 

58.2

58.8

 

 

  EUR

 

Core CPI (YoY) (Nov)  

 

1.1%

1.1%

 

 

  EUR

 

CPI (YoY) (Nov)  

 

0.2%

0.1%

 

 

  USD

 

FOMC Member Lockhart Speaks 

 

 

 

 

 

  USD

 

ADP Nonfarm Employment Change

 

190K

182K

 

 

  USD

 

Fed Chair Yellen Speaks  

 

 

 

 

 

  USD

 

Nonfarm Productivity (QoQ) (Q3)

 

2.2%

1.6%

 

 

  USD

 

Unit Labor Costs (QoQ) (Q3)

 

1.1%

1.4%

 

 

  USD

 

FOMC Member Tarullo Speaks  

 

 

 

 

 

  USD

 

Crude Oil Inventories

 

-1.125M

0.961M

 

 

  USD

 

Fed Chair Yellen Speaks  

 

 

 

 

 

  USD

 

Beige Book

 

 

 

 

 

  USD

 

FOMC Member Williams Speaks 

 

 

 

   

Government Bond Auctions

Date Time Country

Dec 02 11:30 UK Gbp 3.75bn 1.5% Jan 2021 Gilt

Dec 02 16:30 Sweden Announces details of Bond on 11 Dec

Dec 03 10:30 Spain 1.15% Jul 2020 Bono

Dec 03 10:50 France

Dec 03 11:03 Sweden Sek 0.7bn 1%

Dec 07 13:00 Norway Details bond auction on 09 Dec

Dec 07 17:30 Italy Announces details of BTP/CCTeu on 11 Dec

Dec 08 11:30 UK 3.5% 2045 Gilt auction

Dec 08 19:00 US Holds 3-year note auction

Dec 09 11:03 Sweden Holds bond auction

Dec 09 11:05 Norway Holds bond auction

Dec 09 11:30 Germany Eur 3bn Dec 2017 Schatz

Dec 09 19:00 US Holds 10-year note auction

Dec 10 19:00 US Holds 30-year bond auction

Dec 11 11:10 Italy Auctions BTPs/CCTeus

 

 

USD/CNY Fundamental Analysis – December 1, 2015 – Forecast

usdcny monday bnsAnalysis and Recommendation:

The USD/CNY opened the week at 0.6395 flat so far in the morning paying little attention to the climbing US dollar. The Chinese stock market plunged on Friday as regulators begin looking into investment brokers. The International Monetary Fund is expected to announce today that China’s currency will join the fund’s group of international reserve currencies which currently includes the US dollar, the euro, the yen and the British pound, the BBC reported.

China is the world’s second-largest economy behind the US, and asked for its currency to become a reserve currency last year. The International Monetary Fund is expected to announce today that China’s currency will join the fund’s group of international reserve currencies which currently includes the US dollar, the euro, the yen and the British pound, the BBC reported.

China is the world’s second-largest economy behind the US, and asked for its currency to become a reserve currency last year.

Some traders expect Beijing may allow the yuan to depreciate after being admitted to the SDR basket, partly to reflect China’s slowing economic growth. Bearish views on the currency rose to their highest in three months, according to a Reuter’s poll last week.

The offshore Chinese yuan rebounded from early lows by more than 300 pips against the dollar on Monday, with traders suspecting Beijing intervention. In less volatile onshore trade, the yuan fell to a three-month low of 6.3918 to the dollar.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

Today’s economic releases:

Cur.

 

Event

Actual

Forecast

Previous

 

  NZD

 

Building Consents (MoM) (Oct)

5.1%

3.0%

-5.8%

   

  JPY

 

Industrial Production (MoM) (Oct)  

1.4%

1.9%

1.1%

 

 

  JPY

 

Retail Sales (YoY) (Oct)

1.8%

0.8%

-0.2%

 

 

  NZD

 

ANZ Business Confidence (Nov)

14.6%

15.0%

10.5%

 

 

  AUD

 

Company Gross Operating Profits

1.3%

1.0%

-0.5%

   

  AUD

 

Private Sector Credit (MoM) (Oct)

0.7%

0.6%

0.8%

 

 

  JPY

 

BoJ Governor Kuroda Speaks  

 

 

 

   

 usdcny

Upcoming Economic Events that you should be monitoring:

Tuesday, December 1, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  AUD

 

AIG Manufacturing Index (Nov)

 

 

50.2

 

 

  JPY

 

Capital Spending (YoY) (Q3)

 

 

5.6%

 

 

  AUD

 

Building Approvals (MoM) (Oct)

 

-2.3%

2.2%

 

 

  AUD

 

Current Account (Q3)

 

-16.5B

-19.0B

 

 

  CNY

 

Manufacturing PMI (Nov)

 

49.8

49.8

 

 

  CNY

 

Non-Manufacturing PMI (Nov)

 

 

53.1

 

 

  CNY

 

Caixin Manufacturing PMI (Nov)

 

48.3

48.3

 

 

  AUD

 

Interest Rate Decision (Dec)

 

2.00%

2.00%

 

 

  EUR

 

German Manufacturing PMI (Nov)

 

52.6

52.6

 

 

  EUR

 

German Unemployment Change

 

-5K

-5K

 

 

  EUR

 

German Unemployment Rate (Nov)

 

6.4%

6.4%

 

 

  EUR

 

Manufacturing PMI (Nov)

 

52.8

52.8

 

 

  GBP

 

Manufacturing PMI (Nov)

 

54.0

55.5

 

 

  EUR

 

Unemployment Rate (Oct)

 

10.8%

10.8%

 

 

  USD

 

Manufacturing PMI (Nov)

 

 

52.6

 

 

  USD

 

ISM Manufacturing Employment

 

48.5

47.6

 

 

  USD

 

ISM Manufacturing PMI (Nov)

 

50.4

50.1

 

 

Government Bond Auctions

Date Time Country

Dec 01 11:30 UK 1.5% 2021 Gilt auction

Dec 02 16:30 Sweden Announces details of Bond on 11 Dec

Dec 03 10:30 Spain Auctions

Dec 03 10:50 France Auctions OATs

Dec 03 11:03 Sweden Holds I/L bond auction

Dec 04 11:03 Sweden Holds I/L bond auction

 

 

USD/CNY Weekly Fundamental Analysis- November 30 – December 4, 2015 – Forecast

usdcny weekly bnsWeekly Analysis and Recommendation:

The USD/CNY will start the new week at 6.3950 falling on Friday after Chinese stock markets plunged as government regulators announced new investigations. The pair gained 0.18% this week as the greenback climbed ahead of the NFP on Friday and the December FOMC meeting. The dollar index, which measures the greenback against six major currencies, touched a high of 100.200, closing in on its yearly peak of 100.390.

China’s yuan, or renminbi, was among the other big movers in major currency markets, with offshore rates hitting their weakest in more than two months ahead of a decision on Monday on whether to include it in the IMF’s basket of reserve currencies.

The yuan was again fixed weaker by Chinese authorities and offshore rates fell ahead of the IMF’s decision. The currency is expected to be added to the basket, but with a lower weighting than previously estimated, due to the relative scarce use of the RMB in financial transactions worldwide.

The currency is expected to be added to the basket, but with a lower weighting than previously estimated, due to the relative scarce use of the RMB in financial transactions worldwide.

Late on Thursday, it was announced that China’s securities regulator was investigating the country’s largest brokerage, Citic Securities. The firm is being probed over the possible breaking of market rules.

Rival brokerage Guosen Securities is also being investigated, and shares in both Citic and Guosen fell by 10%, the maximum allowed in one day. In addition, trading in China Haitong Securities shares was halted and later in the day the firm also confirmed it was under investigation.

Chen Xingyu, an analyst at Phillip Securities, told the AFP news agency: “The biggest reason for such a sudden drop today is because of regulator’s investigation of the top brokers. It has triggered a broader sell-off.”

Analysts said there was little information on the specific reasons for the probes other than violations of securities regulations. But the Reuters news agency reported that the Chinese regulator was urging brokerages to stop financing investors’ stock purchases through swaps in an attempt to curb leveraged trading.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which cover the current week and are published by Sunday before the new week begins. Daily as the markets close we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole. Please click on the links to find the most recent reports for this asset.

usdcny

Major Economic Events for the week:

 

 

 

 

Event

 

 

Consensus

Previous

   

 

TUESDAY, DEC 01

 

 

 

 

JPY

Bank of Japan Governor Kuroda

 

         

 

 

 

AUD

RBA Interest Rate Decision

 

 

2%

2%

   

 

 

 

AUD

RBA Rate Statement 

 

         

 

 

 

EUR

Unemployment Change (Nov)

 

 

-5K

-5K

   

 

 

 

EUR

Unemployment Rate s.a. (Nov)

 

 

6.4%

6.4%

   

WEDNESDAY, DEC 02

 

 

 

 

AUD

RBA’s Governor Glenn Stevens

 

         

 

 

 

EUR

Consumer Price Index – Core

 

 

1.1%

1.1%

   

 

 

 

EUR

Consumer Price Index (YoY) (Nov)

 

 

0.2%

0.1%

   

 

 

 

EUR

Producer Price Index (MoM)

 

 

-0.4%

-0.3%

   

 

 

 

EUR

Producer Price Index (YoY) (Nov)

 

 

-3.2%

-3.1%

   

 

 

 

CAD

BoC Interest Rate Decision

 

   

0.5%

   

 

 

 

CAD

BOC Rate Statement 

 

         

THURSDAY, DEC 03

 

 

 

 

EUR

ECB Interest Rate Decision (Dec 3)

 

 

0.05%

0.05%

   

 

 

 

EUR

ECB press conference 

 

         

 

 

 

USD

Fed’s Yellen testifies 

 

         

FRIDAY, DEC 04

 

 

 

 

USD

Unemployment Rate (Nov)

 

 

5%

5%

   

 

 

 

USD

Nonfarm Payrolls (Nov)

 

 

200K

271K

   

 

 

 

CAD

Net Change in Employment (Nov)

 

 

0.7K

44.4K

   

 

 

 

CAD

Unemployment Rate (Nov)

 

 

7%

7%

   
                                     

Upcoming Government Bond Auctions

Date Time Country 

Dec 01 11:30 UK 1.5% 2021 Gilt auction

Dec 02 16:30 Sweden Announces details of Bond on 11 Dec

Dec 03 10:30 Spain Auctions

Dec 03 10:50 France Auctions OATs

Dec 03 11:03 Sweden Holds I/L bond auction

Dec 04 11:03 Sweden Holds I/L bond auction

 

 

 

US Dollar And Japanese Yen Up On “Safety” Rally

US Dollar And Japanese Yen  Up On "Safety" RallyThe US dollar and the Japanese yen soared Monday morning as markets move to safety after the massive terrorist attacks in Paris over the weekend. The US dollar gained 30 points to 99.19 ignoring weakness last week on disappointing retail sales data released on Friday. The Japanese yen totally ignored GDP numbers released today putting Japan back into a technical recession. The yen gained 75 points against the euro to trade at 131.34. Against the greenback the yen was able to gain 12 points to 122.48. Japan’s economy slid back into recession in July-September as uncertainty over the overseas outlook hurt business investment, putting policymakers under growing pressure to deploy new stimulus measures to support a fragile recovery.

Many analysts expect the economy to grow only moderately in the current quarter as companies remain hesitant to use their record profits for wage hikes, underscoring the challenges premier Shinzo Abe faces in pulling Japan sustainability out of stagnation with his “Abenomics” stimulus policies.

japan-gdp-growth-annualized

The U.S. dollar is stronger in Asia early Monday amid a broad-based move toward safe assets after attackers killed 129 people in Paris over the weekend, prompting retaliatory strikes by France on Islamic State’s stronghold in Syria. Reaction is being led by the euro, which dropped sharply at the start of trading against the U.S. dollar. The euro tumbled 50 points to trade at 1.0723.Traders said the market would respond to any escalation in European tensions, with some expecting stronger rhetoric against Islamic State in a G-20 statement due later today. 

The attacks might have some ability to disrupt the U.S. Federal Reserve’s planning around an interest-rate increase in December. This is the type of event that could have the Fed rethinking whether to tighten policy next month if global equity markets see a significant correction in coming days.

us dollar index

A recommendation by the International Monetary Fund to include China’s yuan in the elite basket of currencies that comprise the IMF’s lending reserves was largely overshadowed by the events in Paris.

The Australian and New Zealand dollars declined in the Asian session with the Aussie giving up 15 points against the stronger US dollar. The Aussie is trading at 0.7115. The kiwi dipped 12 points against the buck even as retail data hit the markets.  New Zealand retail turnover jumped sharply in the three months to September with an increase of 1.6% reported. The figure, far stronger than the 0.1% gain of the prior quarter, smashed expectations for an increase of 1.2%. The sharp lift in sales left annual turnover up 5.7% from a year earlier, higher than the 5.1% pace seen in the three months to June. The kiwi fell to 0.6528. Traders were more concerned with the problems in Paris than the jump in dairy prices. Fonterra has indicated the forecast dividend may be in the 35-to-40 cents per share range up from 25 cents last year, which disappointed many farmers who expected to gain more from the value- added side of the business when dairy input prices were down. The revision would mean a likely total payout to farmers of $4.95 to $5 per kilogram of milk solids after retentions, compared to $4.65 last season.

new zealand retail sales

Chinese Manufacturing PMI Leaves Currency Traders Confused

Chinese Manufacturing PMI Leave Currency Traders Confused
Chinese Manufacturing PMI Leave Currency Traders Confused

Mixed Chinese manufacturing data over the weekend is keeping Asian markets confused. While equities markets around the region were down, China’s central bank moved to bolster the value of the nation’s currency by strengthening daily fix by the most for a single day since 2005. The People’s Bank of China set the value of the currency’s mid-rate 0.54 per cent stronger against the US dollar — the largest amount the fix has been reinforced since the renminbi was de-pegged from the greenback a decade ago.

The official purchasing managers index was unchanged at 49.8 in October, the National Bureau of Statistics said Sunday. That compared with a median estimate of 50, the line between favorable and unfavorable conditions, in a Bloomberg survey of economists. The official non-manufacturing PMI, a barometer of services and construction, fell to 53.1 from 53.4 in September, the weakest since December 2008. A separate purchasing managers’ index from Caixin Media and Markit Economics improved to 48.3 in October. That beat the median estimate of 47.6 in a Bloomberg survey and rose from the final reading of 47.2 in the month earlier.

The reports highlight the challenges confronting China’s old growth drivers as weaker manufacturing offsets strength from the transition to a services-led economy. The nation’s top leaders have reiterated priorities of both reforming the economy and maintaining medium- to high-speed growth in the next five years, according to a communique released by Xinhua News Agency on Thursday.

The Aussie dollar and the kiwi were in the red in early trading with the Aussie rebounding after domestic data showed a jump in monthly building approvals. The Aussie climbed 5 points to trade at 0.7141 as traders prepare for the RBA meeting tomorrow. What the Reserve does this week – and how the major banks respond if it cuts – will also be closely watched by smaller regional banks, most of which have not increased their rates as the larger lenders did last month. At this writing the odds are that the RBA will stand pat.

audusd

The New Zealand dollar did not fare as well declining a few points to trade at 0.6778 with China being its largest trading partner the questionable situation out of China leaves kiwi traders stressed. At current market analysts are projecting that China will miss its 7% growth for the year. The New Zealand dollar may decline this week, weighed down by dovish sentiment from the Reserve Bank of Australia, a decline in dairy auction prices and low US jobs growth. ANZ Bank is due to publish its monthly commodity price index tomorrow ahead of the overnight GlobalDairyTrade auction where futures market pricing is predicting a decline in the price of New Zealand’s largest commodity export.

In Japan the yen was mixed against the dollar and the euro. The USDJPY traded at 120.32 dipping 30 points but remaining dead center of its trading range after the Bank of Japan held rates and policy on Friday. The EURJPY is flat at 132.71. The dollar stood unchanged at 120.55 yen after losing 0.4 percent on Friday, when the BOJ wrong-footed investors who had wagered that the Japanese central bank would ease policy.

Focus now falls on US data, including the all-important non-farm payrolls due on Friday, and how that could affect the Federal Reserve’s stance on interest rates. The Fed did not hike rates this month but caused a stir by leaving the door open for a hike in December.

usdjpy

Chinese Exports Soar But Imports Remain Weak

Chinese Exports Soar But Imports Remain Weak
Chinese Exports Soar But Imports Remain Weak
It was a busy morning in Asian markets with a speech from RBA Assistant Governor Lowe followed by the Bank of Japan monetary policy minutes and Aussie business confidence. The big event though was the Chinese trade balance data. Exports did better than expected while imports tumbled farther.  China’s trade balance came in at 376.20B yuan against expectations of $292.41B. According to China Customs, in a headline via Bloomberg, exports narrowing fall shows good momentum, adding that foreign trade still faces difficulties, Reuter’s reports. A 3 percent increase in American imports from China also factored into the widening of the trade deficit. China’s currency has depreciated sharply in recent months, reflecting concerns of a possible crash in the Chinese economy, which is the second largest in the world after the United States.

Also on Tuesday, the International Monetary Fund cut its global growth forecasts for the second time this year, citing weak commodity prices and a slowdown in China. It also warned that policies aimed at increasing demand were needed.

The Australian and New Zealand dollar tumbled after Monday’s gains on news on additional stimulus pushed the commodity currencies higher. The kiwi dropped 46 points to 0.6672 while the Aussie declined by 53 points to 0.7309. Even the better than expect numbers from China did not support the currencies. Weakness in the import data continued to weigh on the currencies. Favorable economic data has helped the NZD rally against the greenback over the past week. A fourth consecutive rise at the GlobalDairyTrade auction and some good results in the quarterly survey of business opinion has helped the NZD jump from just under 0.6500 last week to more than 0.6700 yesterday.

china-exports

The Aussie dollar responded to words from Assistant Deputy Lowe this morning which were balanced by a slightly stronger business confidence report.

The Bank of Japan minutes hit the wires this morning supporting the yen, as it seems that the Bank is not ready to add additional stimulus at its October 30th meeting.  Members of the Bank of Japan’s monetary policy board said that the country’s economic recovery remains more or less on track, minutes from the bank’s September 14 and 15 meeting revealed on Tuesday.

audusd

Inflation expectations appear to be rising, the minutes said, while exports and industrial production have been more or less flat. Downside risks include the health of commodity exporters and emerging markets, as well as the pace of the economic recovery in the United States. At the meeting, decided to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion. The JPY is trading at 119.84 and against the euro at 136.19 well within its trading range.

The US dollar tumbled under the 95 level after a bevy of Fed speakers on Monday seemed to support a rate increase in 2015. In the early hours on Tuesday, FOMC member Brainard seemed to go against the grain and said that the economy is not ready for an increase until 2016 which weighed on the greenback. The dollar is up 3 points at 94.92.

usdjpy

October Starts Off With A Bang For Currencies

October Starts Off With A Bang For Currencies
October Starts Off With A Bang For Currencies
The new month started with a bang as Chinese PMI data printed a bit better than forecast helping to boost Asian currencies. Chinese markets are on holiday for the next several days. The Australian dollar and the New Zealand dollar both rallied. The Aussie climbed to 0.7046 while the kiwi gained to 0.6413.

China’s final Caixin manufacturing Purchasing Managers’ Index for September fell to a new six-and-a-half year low of 47.2, versus an earlier flash estimate of 47. The private survey came on the heels of a separate gauge of manufacturing activity. The government’s official PMI rose to 49.8 in September, up from August’s three-year low of 49.7. Unlike the government’s gauge that concentrates on large firms, Caixin’s survey focuses on smaller and medium-sized companies.

The official report from the National Bureau of Statistics was a pleasant surprise for markets, as several analysts expected either a flat or lower reading. A poll of economists expected 49.6, which would have marked the weakest level since August 2012.

The US dollar remained in a strong position continuing to gain in the Asian session to trade at 96.46. The strength of the private ADP payroll report helped the greenback to gain.  Companies stepped up hiring in September, indicating the U.S. job market is standing firm in the face of weaker global demand, according to a private report based on payrolls.

us dollar thurs

A 200,000 increase in employment followed a revised 186,000 rise in the prior month, figures from the ADP Research Institute showed Wednesday. The median projection of economists surveyed by Bloomberg called for an advance of 190,000.

The additions to company headcounts are consistent with resilient demand in the U.S. even as some industries face challenges of weaker overseas sales. Labor Department data on Friday are projected to show payroll gains accelerated this month compared with August.

The Japanese yen eased after the release of data in the morning. The USDJPY climbed to 120.23 while the EURJPY added 20 points to 134.20. The Japanese Large Tankan Index printed a bit lower than expected sending the yen down.  The yen lost additional momentum as traders moved away from safety. The headline index for big manufacturers’ sentiment fell 3 points from three months earlier to plus 12 in September, the Bank of Japan’s quarterly “tankan” survey showed on Thursday. That compared with the median estimate of plus 13 in a Reuters poll of economists. Larger firms plan to raise capital expenditures by 10.9 percent in the fiscal year that started April 1, compared with their previous plan to boost capital spending by 9.3 percent.

The survey comes just a day after data showed that Japanese factory output shrank by 0.5% in August from July, and retail sales also fell short of expectations. The weak outlook from Japanese firms will only “add fuel” to calls for more easing from the central bank.

usdjpy thurs

China’s Stimulus Measures Fuel Huge Market Reversals

YuanLast week’s tumultuous trading action created two-sided trades in most equity, currency and commodity markets. The common themes all week were excessive volatility and “risk-off” and “risk-on” investing strategies.

The price action on Monday set the tone for the week after China’s stock market tumbled nearly 9 percent, fueling sharp breaks in global equity markets. U.S. equity markets had a volatile session with the S&P 500 and NASDAQ slipping into correction territory, which is a 10 percent decline from recent highs. At one point, the Dow Jones Industrial Average was down over 1,000 points, or almost 7 percent before bargain hunters came in to cut the losses.

Stock market volatility as measured by the CBOE Volatility Index (VIX) moved above 50 for the first time since 2009, setting the stage for a possible major meltdown in the stock market later in the week.

Investors sought out save havens as stock market losses mounted. The most common investing strategy was “risk-off” as money flowed in the gold futures market sending it to its highest level since early July. Crude oil futures also fell well-below the $40.00 level on the idea that a Chinese recession would lead to even lower demand for oil.

A weaker U.S. Dollar also contributed to the rise in gold as investors began to reduce bets for a Fed interest rate hike in September due to the turbulence in the global financial markets. The central bank is not likely to raise interest rates next month while the rest of the world is cutting rates to provide liquidity for their financial systems. This would’ve created potential problems because most of the investing capital in the world would’ve come into the U.S. to capture the higher yield.

The steep drop in equity prices also drove the EUR/USD sharply higher while punishing the USD/JPY. Both the Euro and the Japanese Yen benefitted from the fallout in the equity markets because both are funding currencies due to the extremely low interest rates in the Euro Zone and Japan. During bull markets, investors tend to borrow in the cheapest currency to invest in higher-yielding assets. However, when investors feel the need to dump risky assets, they have to return the money they borrowed.

China came in on Tuesday to stabilize the markets by initiating fresh stimulus measures, triggering a “risk-on” response by traders. The People’s Bank of China cut its one-year lending rate to 4.6% while reducing the reserve requirement for Chinese banks.

In addition, it flooded the market with Yuan to weaken the currency and to provide liquidity for its financial system. The moves by the PBOC were well-received by the markets because by the end of the week, U.S. equity markets had recovered all of their earlier losses. Additionally, gold broke sharply from its one-month high while the Euro and Yen gave back all of their earlier gains and then some.

While most investors were watching the volatile price action in the financial markets, the U.S. released a pair of stronger-than-expected economic reports. U.S. durable goods posted a solid gain, beating the estimates. U.S. GDP also surprised investors, giving the dollar a boost. This report showed that the economy grew by 3.7%, up from the previous 2.3% reading.

A sharp rise in crude oil prices also caught investors off guard. Although it was all likely driven by aggressive short-covering, the October futures contract jumped nearly 12% for the week. Setting the bullish tone for this market was a surprise drawdown in supply, the sharp recovery in equity markets and severely oversold technical conditions. 

Currency Traders Are Skeptical And Remain Worried

Currency Traders Are Skeptical And Remain Worried
Currency Traders Are Skeptical And Remain Worried
Currencies continue to recover but not as significantly as hoped after China injected massive amounts of cash into the system. The Aussie is in the green at 0.7132 bouncing off the 0.70 price level but remains at the very bottom of its trading channel. The kiwi has fared a bit better adding 22 points to 0.6496 after the release of a better than expected trade balance. The kiwi is holding close to the 0.65 price level.  Exports to China, the country’s biggest trading partner, rose 14 percent in July to $695 million, underpinned by sales of frozen beef. Sales to China fell 28 percent on an annual basis as the world’s most populous nation scaled back its purchases of New Zealand dairy products. Imports from China climbed 28 percent to $898 million in July, for a 15 percent annual increase.

Trade with the US increased in July, with exports up 30 percent to $479 million, largely on increased beef sales, and imports rising 8.9 percent to $665 million. On an annual basis, exports to the US climbed 31 percent, and imports gained 20 percent.

In a sign that markets are slowly moving back to risk on mode, the Japanese yen continued to decline after skyrocketing on safe haven demands this week. The USDJPY is trading at 119.25 well below its 3 month trading average, but slowly recovering while against the euro the yen is at 137.39. The yen swung between being the best and worst Group-of-10 currency on Wednesday as Chinese stocks fluctuated, a day after the People’s Bank of China stepped up stimulus.

usdjpy wed

There was little on the economic calendar as the month is just about over and most of the globe is on holiday. Action is expected to remain fairly subdued over the next day or so as traders just breathe a sigh of relief and go back to the family holidays with UK bank holiday on Monday and the following week the US Labor day closes out the summer vacation season.

The euro and the pound have been the best performing currencies during this time of tribulation. The euro is trading at 1.1521 and the pound at 1.5713. The notion that the euro could be a haven in times of turmoil seemed preposterous just a few weeks ago. Yet that’s exactly what it’s become as the world gets rocked by everything from devaluations to bear markets in stocks.

The euro has surged almost 4% against a basket of developed nation peers in the past month, the biggest gain in the group. It’s up against more of the world’s major currencies than the dollar, yen, Swiss franc or pound. And it’s climbing even as the European Central Bank expands the supply of euros.

While the rally signals confidence in the 19-nation currency union following the Greek crisis, it also complicates the ECB’s efforts to jump-start the economy. That’s because a stronger exchange rate has the potential to curb exports and slow inflation. “Safe-haven flows have been mainly targeted at the euro, which is stunning,” said Thu Len Nguyen, a strategist in Frankfurt at Commerzbank. “The ECB won’t just stand aside and may start to verbally weaken the euro”.

eurusd wed

Increasing doubt that the Federal Reserve will raise interest rates in September is also supporting Europe’s single currency. The ECB’s quantitative-easing program is even starting to support the euro by reassuring investors there’s demand for European assets. The purchases started out debasing the currency by putting more money into circulation.  The US dollar is holding at 93.97 well below its 98 price level just a week ago. 

Fed Minutes, China Manufacturing Set Off Volatile Reactions

US DOLLARTwo events created volatility in the financial markets last week. The first was the release of the U.S. Federal Reserve minutes for its July meeting. The second was the release of a weak report on Chinese manufacturing data.

The markets were relatively calm to open the week as many investors took to the sidelines ahead of the release of the Fed minutes on August 19. Japan opened the week with the release of preliminary GDP data. GDP came in at -0.4% versus the forecast of -0.5%. It was also well below the previous reading of 1.0%.

On August 18 the Reserve Bank of Australia released its latest minutes without much fanfare. The minutes showed that the RBA members were satisfied with the price of the Australian Dollar, diminishing the probability of another rate cut before the end of the year.

Later in the day, the U.K. released better-than-expected consumer inflation data. The CPI report showed that inflation rose 0.1% versus an estimate of 0.0%. This news helped underpin the British Pound, but the GBP/USD investors were disappointed later in the week by a weak U.K. retail sales report which showed a 0.1% gain versus a 0.4% estimate.

On Wednesday, shortly before the release of the Fed minutes, the U.S. reported weaker than expected consumer inflation data. The CPI report showed a modest gain of 0.1% versus an estimate of 0.2%. Crude oil futures reached a 6 ½ low after the U.S. Energy Information Administration weekly inventories report showed a 2.6 million barrel increase versus a 600,000 barrel drawdown.

These reports elicited normal responses from traders, however, this was about to change with the release of the Fed minutes on Wednesday.

Volatility returned to the markets on Wednesday after the minutes of the Fed’s July policy meeting left mixed messages about whether central bank officials are leaning toward or against a rate increase at their next meeting in September. This came after several months of suggesting they were prepared to raise rates for the first time since 2006.

Most Fed members believe the economy was approaching the point of a rate hike, but that it was not quite there yet. The minutes, however, also showed that officials had wide-ranging views about making the move to hike rates. The general feeling among investors is that the Fed is still concerned about inflation and its ability to reach the 2 percent mandate.

The mixed message in the Fed minutes helped drive down U.S. equity markets as well as the U.S. Dollar. The minutes triggered strong rallies by the EUR/USD and gold.

The volatile reaction to the Fed minutes was relatively mild compared to the reaction to the release of more bad economic data from China on Friday. World stocks tumbled towards their worst week of the year with the U.S. Dow and NASDAQ indices officially entering the “correction phase”.

The U.S. Dollar also broke sharply on the news that Chinese manufacturing activity had reached its lowest level in 77 months. The Caixin Markit Flash Manufacturing PMI fell from 47.8 last month to 47.1. Any reading below 50 signals a contraction.

Gold soared and the Euro rose to its highest level in several months to finish the week as traders priced in the possibility of a Chinese recession. In addition, the volatility on Friday in the U.S. equity markets added to doubts that the U.S. Federal Reserve will raise interest rates next month.  

This week begins with increasing worries about China. Traders are worried that China will return to the foreign currency markets in an effort to stabilize its stock market. Two weeks ago, the People’s Bank of China devalued the Yuan three times. The reactions to this event are still on the minds of investors, which likely means a jittery opening on Monday. 

PBOC Devaluation Threat Means Fed Will Scrap September Rate Hike

FEDERAL RESERVELast week’s financial markets opened with the focus on U.S. interest rates and whether the economy is strong enough for the U.S. Federal Reserve to start raising interest rates for the first time since 2006. Atlanta Fed President Dennis Lockhart said the Fed is close to raising interest rates. However, Federal Reserve vice chairman Stanley Fischer suggested a September rate hike is not a done deal.

Lockhart said, “I think the point of ‘liftoff’ is close. The economy has made great gains and is approaching an acceptable normal…conditions are no longer extraordinary.” He also added, “I remain very disposed to September being a possible date for a liftoff decision.” He did emphasize that he expected a gap of at least one policy meeting between subsequent increases. “In my mind gradual is going to mean something less frequent than every meeting”, he said.

Fischer, on the other hand, saw things a little differently. He suggested the central bank will not make its first interest rate hike since the financial crisis next month. Fischer told Bloomberg TV, “The interesting situation is which we are is that employment has been rising pretty fast relative to previous performance and yet inflation is very low.” He then added, “And the concern about the situation is not to move before we see inflation as well as employment returning to more normal levels.”

The price action on the foreign currency markets suggested that the market believed Fischer more than Lockhart. After all, Fischer is seen as a powerful number-two behind Fed Chairwoman Janet Yellen. The U.S. Dollar weakened on the news, triggering strong rallies by the British Pound and Euro. Gold and stock markets also benefited from Fischer’s comments because they meant that interest rates would likely remain lower until possibly December.

On Tuesday, turmoil hit the financial markets with the surprise move by the People’s Bank of China (PBOC) to devalue the yuan three consecutive sessions with perhaps more to come. With this startling move by China’s central bank, the odds of a rate hike by the Fed in September are now set at 50/50.

On August 11, the PBOC moved the mid-point of the yuan 1.9% lower against the U.S. currency. This was the biggest one-day drop since China’s dual currency system more than two decades ago. The central bank followed its initial action with another 1.6% cut on August 12. After briefly intervening to prop up the yuan on Wednesday, it guided its currency lower for a third day on August 13.

China made this move because the strength in the U.S. Dollar was hurting its exports. However, a quick boost in China’s exports could wreak havoc for U.S. export competitiveness. China’s devaluation is likely to help its ability to export, but at the expense of U.S. exporters.

With other countries like Canada, New Zealand and Australia cutting rates to weaken their currencies and boost exports, the move by China may encourage emerging markets to become more aggressive in protecting their export markets. While it is highly unlikely the U.S. Fed will cut rates to weaken the dollar, it will likely postpone a rate hike in September because it has to protect U.S. exports. At this time, it appears the Fed will have to refrain from any decision that will strengthen the Greenback.

What makes the foreign currencies the main focus at this time will be the presence of uncertainty and increased volatility because China may continue to weaken the yuan. And if it does then we could be looking at a substantially overvalued U.S. Dollar. 

Global Currency Watch – Thursday August 13

currency ball forexwordsChinese central bank moves have dominated the global financial headlines for the last 2 days.  The US Dollar Index weakened by 1.1 percent yesterday after the investors fretted over the slowdown in Chinese economy which could possibly delay the interest rate hike move by the US Federal Reserve.

Moreover, positive developments on the Greek front along with mixed economic data releases from the nation kept the US Dollar Index pressurized. US Dollar Index made an intraday low of 95.95 and closed at 96.30 on Wednesday. This morning the US dollar added 20 points to trade at 96.48 after news that the PBOC intervened selling dollars to help support its currency.  China guided its currency lower for a third day Thursday after briefly intervening to prop it up the day before, showing how the leadership is struggling to manage the market in largely uncharted territory for Beijing.

The Aussie and the kiwi were the biggest benefactors in China’s buying on Wednesday as the Tasmania currencies bounced back. The Aussie moved to 0.7382 while the kiwi gained to 0.6620. Australia’s dollar rose 0.3 percent while New Zealand’s gained 0.2 percent.

After the initial wave of selling in the wake of the move of the yuan to 6.23, the Aussie came under further pressure again yesterday morning when the official reference rate was allowed to depreciate another 1.6% to 6.33. That took it to a fresh 6-year low of 0.7216.

But it has rallied around 170 points, 1.7 cents; against the US dollar since the low as forex traders reassess what the Chinese move means for the Fed. That’s seen the euro closing in on 1.12, the kiwi back above 66 cents and the Canadian dollar pushing USDCAD back down to 1.29.

aussie moves

Euro strengthened by 1.1 percent yesterday as the discussions over a massive third rescue package of nearly €85bn (£60bn) is going through final touches. Greece and the EU leaders agreed a bailout deal “in principle” thereby infusing an optimism wave in the market and supporting the shared currency.

Due to recent turmoil and the cuts required by the bailout, Greek’s economy is expected to shrink 2.3% this year and face two years of recession thereby causing worry to the Euro-zone’s economy as a whole. The euro soared over 110 points on Wednesday and gave back 22 points as markets corrected in the morning session to trade at 1.1137.

markets reaction to china

The Great British pound gained 0.26 percent yesterday due to weakness seen in the US Dollar Index after investors speculated that Yuan’s devaluation could delay the rate hike move by the US Federal Reserve. Moreover, robust economic data release from the nation showed that UK’s unemployment rose in the second quarter and total wage growth slowed thereby suggesting some easing in the recovery of the labor market which sent the pound to trade at 1.5621.

The Japanese yen weakened on Wednesday and this morning as more lackluster economic data hit the wires and a done deal with Greece eased safe haven trades. The JPY is trading at 124.43. The Japanese Yen depreciated by 0.72 percent yesterday due to positive developments on the Greek front prompted the traders to place bets on other currencies that acted as a negative factor for the currency. Moreover, disappointing economic data release form the nation showed that core machinery orders for June dropped more than expected. Japan’s Core Machinery Orders for the month of July declined to -7.9 percent from a gain of 0.6 percent in June.

Chinese Inflation Data Having A Global Rippling Effect

Chinese Inflation Data Having A Global Rippling Effect
Chinese Inflation Data Having A Global Rippling Effect
Chinese data will weigh on trading throughout the day; this morning inflation figures from China missed their mark. Consumer prices in China increased less than expected during May in a further sign that activity remains subdued in the world’s second biggest economy. The Consumer Price Index rose 1.2 per cent in May, compared to a year earlier. This was well below expectations of a 1.4 per cent rise.

chinese cpi

The Producer Price Index, a gauge of wholesale prices, declined for the 39th month in succession. The PPI fell by 4.6 per cent in May, the same decline as in April. China has cut interest rates three times over the last seven months and reduced the amount of capital banks must keep in reserve, as it seeks to boost growth. It has also rolled out target stimulus measures, including increasing the pace of railway investment and construction of social housing. But the government has avoided rolling out a broad-based stimulus program such as the ECB and the Fed did when needed.  This data will have a rippling effect hitting commodity currencies and the commodities market directly.

chinese ppi

The US dollar continued to decline as it is rumored that President Obama at the G7 summit said that the US dollar was too high, although the Administration is saying that this is a misquote.  The Aussie dollar was able to stay flat this morning at 0.7703 with the weaker dollar and stronger internal indicators offset the declining in Chinese prices. The US dollar dipped 20 points in the Asian session to trade at 95.02. The kiwi was not so luck, with traders unsure of what to expect from the Reserve Bank, and a lack of local data today the kiwi declined 17 points to trade at 0.7128.

The euro continued to gain as the dollar weakened to trade at 1.1322 having one of the best days this year. Greece continues to weigh on traders but with things put off until the end of the month, the euro was able to rebound against the greenback.  Over the weekend, EU Commission President Juncker warned Greece that time was running out to conclude a debt deal to avert a damaging Greek default.

The Japanese yen has been trading with strength after GDP and current account data on Monday beat expectations. The USDJPY declined from a 13 year high to trade at 1.2445 this morning when just yesterday morning the pair was well above the 125 level. The EURJPY added 34 points as the euro continued its rebound and is trading at 140.90 its highest level in the last few months.  The Japanese economy performed much faster than estimated in the first quarter, bolstering views Abenomics and the Bank of Japan’s massive stimulus plan are taking effect. In a revision, the Cabinet Office said gross domestic product grew at a real annualized rate of 3.9 percent in the January-March quarter, bounding over the 2.4 percent rate listed in its preliminary report released last month.

currency monday

Chinese Premier Li Promises To Meet Growth Targets

Chinese Premier Li Promises To Meet Growth Targets
Chinese Premier Li Promises To Meet Growth Targets
Over the weekend the financial news focused on China’s massive slowing economy. The Chinese Premier virtually never schedules public speeches or news conferences. Other than the Chinese congress little is known of the Premier’s schedule ahead of time. Today was the only speech scheduled this year.  China’s still-closed system of government shields its senior officials from media scrutiny and tightly controls Chinese media. Sunday was Li’s only scheduled news conference all year. Xi likewise rarely faces the media.

The two-hour session of mostly pre-screened questions is a key ritual at the often-ceremonial session, but it did highlight several themes raised by the 3,000 hand-picked delegates.

Li assured global markets that Beijing has the tools to boost the slowing economy if employment suffers and promised further constraints on government power so that the private sector can grow. Policies unveiled at the annual session of China’s legislature this month called for maintaining a moderately high rate of growth–7%–and outlined further deficit spending to support the goal. Wrapping up the 11-day session at a news conference on Sunday, Premier Li Keqiang said that while the economy faced downward pressure, the government has room to step in and has “more tools in our toolbox” should growth flag and affect employment.

quote on china

Mr Li gave his assurance in Beijing’s Great Hall of the People while warning that China would struggle to meet its annual growth target of “around 7 per cent” this year. The economy grew at its slowest pace for a quarter of a century last year, and the premier’s pledge will be welcomed as evidence of his government’s willingness to support growth amid signs the slowdown is worsening. The government has already lowered its growth target for gross domestic product from last year’s goal of “around 7.5 per cent” after a 7.4 per cent expansion in 2014 — the slowest rate since 1990. Mr. Li didn’t elaborate on options the government might select if growth falls below the target of about 7%—down from the 7.4% rate the economy hit last year. In the past four months, as growth has moderated, the central bank has cut interest rates and reduced the amount of reserves banks are required to hold, and economists expect more rounds of easing in the months ahead. The Chinese yuan continues to rally as China tries to reach it goals but recent data has been a bit lackluster.  The possibility of vast stimulus programs is helping the Aussie and the Kiwi trade in the green this morning.

CNYUSD(60 minutes)20150316062939

“It will be by no means easy” to achieve the GDP target, China’s slowest rate for a quarter century, but the figure reflects a “new normal” of seeking better quality growth and a “more solid foundation to achieve economic modernization”, Li said at a news conference to close the annual session of China’s legislature, the National People’s Congress.

Partnering with the USA, China seeks to “build a new model of a major country relationship featuring mutual respect and no conflict and no confrontation,” he said. The state visit of Chinese President Xi Jinping in September and a bilateral investment treaty under negotiation will boost ties between the world’s largest developed and developing countries, he said.

Although China ranks as the world’s second largest economy, the more important figure is per capita GDP, where China lies behind about 80 other nations.