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

Analysis 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:

 

Upcoming Economic Events that you should be monitoring:

Wednesday, December 2, 2015

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