USD/CNY Fundamental Forecast – February 12, 2016

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Published: Feb 11, 2016, 05:45 UTC

Analysis and Recommendation: The USD/CNY is flat as China remains on holiday. The Lunar holiday keeps China closed for an entire trading week leaving

USD/CNY Fundamental Forecast – February 12, 2016

Analysis and Recommendation:

The USD/CNY is flat as China remains on holiday. The Lunar holiday keeps China closed for an entire trading week leaving volumes in Asia low. A Bloomberg gauge of the dollar versus 10 major peers was near its lowest level since November after Ms Yellen’s comments initially buoyed American stocks, before they retreated into the close. While Australia’s benchmark snapped a four-day drop, futures on US indexes declined, with markets in Tokyo, Shanghai, Taiwan and Vietnam shut Thursday, as those in Hong Kong and South Korea return. Australian 10-year bonds advanced for a third session following an advance in Treasuries. US crude traded below US$28 a barrel.

“Janet Yellen had a delicate task last night – to sound concerned enough to reassure investors that the Fed was feeling their pain, while still sounding upbeat enough to bolster the notion that this volatility will all blow over,” Sharon Zolner, a senior economist in Auckland at ANZ Bank New Zealand, said in a client note. “The Fed has no idea how this is going to pan out either, so all Yellen could really do was ensure she wasn’t the catalyst for the lurch.”

Ms Yellen’s testimony before Congress did little to quell market volatility, with the central bank chief saying the Fed still expects to raise rates gradually while making it clear that continued turmoil may alter its forecasts. She highlighted uncertainty over the pace of China’s growth and the related rout in commodities, concerns that have roiled financial markets throughout the year and twice pushed global shares to the brink of a bear market.

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Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
	Japan – National Founding Day
	China – Lunar New Year
NZD	Business NZ PMI (Jan)	57.9		56.7
GBP	RICS House Price Balance (Jan)	49%	52%	49%
EUR	Eurogroup Meetings
USD	Initial Jobless Claims		281K	285K
CAD	New Housing Price Index (MoM) (Dec)		0.2%	0.2%
USD	Fed Chair Yellen Testifies

Upcoming Economic Events that you should be monitoring:

Friday, February 12, 2016

Holiday China – Lunar New Year

Cur.	Event	Actual	Forecast	Previous
AUD	RBA Governor Stevens Speaks
AUD	Home Loans (MoM) (Dec)		3.0%	1.8%
EUR	German CPI (MoM) (Jan)		-0.8%	-0.8%
EUR	German GDP (QoQ) (Q4)		0.3%	0.3%
EUR	German GDP (YoY) (Q4)		2.3%	1.8%
EUR	EU Finance Ministers Meeting
EUR	GDP (YoY) (Q4)		1.5%	1.6%
EUR	GDP (QoQ) (Q4)		0.3%	0.3%
EUR	Industrial Production (MoM) (Dec)		0.3%	-0.7%
USD	Core Retail Sales (MoM) (Jan)		0.1%	-0.1%
USD	Export Price Index (MoM) (Jan)		-0.9%	-1.1%
USD	Import Price Index (MoM) (Jan)		-1.4%	-1.2%
USD	Retail Sales (MoM) (Jan)		0.1%	-0.1%
USD	FOMC Member Kaplan Speaks
USD	Business Inventories (MoM) (Dec)		0.1%	-0.2%
USD	FOMC Member Dudley Speaks
USD	Michigan Consumer Expectations		82.0	82.7