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

Weekly 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.

Major Economic Events for the week:

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