USD/CNY Fundamental Forecast – April 28, 2016

The USD/CNY traded flat-to-lower, finishing at 6.5015, down 0.0002 or -0.00%, with corporate dollar demand seen offsetting a slightly stronger central bank midpoint and suspected state bank intervention.

Prior to the market opening, the People’s Bank of China set the mid-point rate at 6.4837 per dollar, 0.07 percent firmer than the previous fix at 6.4882, reflecting the dollar index’s retreat against a basket of major currencies overnight.

Spot Yuan opened at 6.4928 per dollar and was changing hands at 6.4896 at midday, steady with the previous close.

Traders cited a bout of dollar buying right after the market opening, however, state-owned banks were selling dollars around 6.4900, in an effort to support the Yuan’s value on behalf of the central bank. There was also a rumor that Apple bought dollar yesterday, forcing the state banks to intervene to keep dollar liquidity in balance.

The offshore Yuan was trading 0.20 percent weaker than the onshore spot at 6.5027 per dollar at midday, with traders adding state banks also intervened in the offshore market.

On Tuesday, the U.S. Federal Open Market Committee kicked off its two-day meeting and is scheduled to release its statement on monetary policy Wednesday afternoon at 2:00 pm ET. The central bank is widely expected to leave interest rates unchanged, but investors will be eyeing its monetary policy statement for clues on the timing of the next rate hike.

Look for the USD/CNY to strengthen if the Fed’s monetary policy statement contains strong language that suggests a possible rate hike in June. If the Fed is dovish then the Yuan should firm.

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.

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Thursday, April 28, 2016

Government Bond Auctions

Date Time       Country           Auction

Apr 27 11:03 Sweden Holds bond auction

Apr 27 11:10 Italy Holds CTZ auction

Apr 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Apr 27 19:00 US 2-year FRN, 5-year note auctions

Apr 28 11:10 Italy Holds 5yr/10yr bond auctions

Apr 28 19:00 US Holds 7-year note auction