USD/CNY Fundamental Forecast – February 11, 2016

Analysis and Recommendations:

The USD/CNY finished lower at 6.5354, down 0.02850, or -0.43%. With China essentially out of the market’s this week because of the Lunar New Year, the price action today will likely be determined by the movement in the U.S. Dollar.

Setting the tone of the market today and determining the direction will be the testimony by Fed Chair Janet Yellen. She begins speaking before the House Committee on Financial Services at 10:00 a.m. ET Wednesday. Her prepared comments will be released at 8:30 a.m. ET. Traders should expect increased volatility and volume when she speaks, but the direction is uncertain. Her comments may, at times, produce a choppy, two-sided trade unless she is definitive about the timing of future rate hikes.

Traders are looking for clarity at this time and Yellen will have to deliver her message with clarity and conviction. If she says that rate hikes are still a possibility then look for the USD/CNY to strengthen. If she comes out dovish or unclear then look for the USD/CNY to weaken. This would include a comment such as the decision will be “data dependent”.

Additionally, if Yellen paints a pessimistic picture of the economy, the Yuan could move higher against the Greenback. Just a few months ago, the Fed was hinting that we could see a series of rate hikes in 2016, but the recent turmoil in global markets has drastically changed these plans, with some experts opening questioning if the Fed will make any more moves before next year.

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.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring: 

Thursday, February 11, 2016

 Government Bond Auctions

Date Time and Country

Feb 11 N/A Italy Euro 4-5bn 30-yr syndicated bond auction

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

Feb 11 11:10 Italy Announces details of bond auction

Feb 11 11:30 UK 3.5% 2045 Gilt auction

Feb 11 19:00 US Holds 30-year bond auction

Feb 11 n/a US Details of 30-yr TIPS auction on Feb 18

Feb 12 11:10 France Details of bond auction on 18 Feb