USD/CNY Fundamental Forecast – January 29, 2016

By:

Published: Jan 28, 2016, 05:06 UTC

Analysis and Recommendation: The USD/CNY was flat in the morning session at 6.5779 as traders reviewed comments from the Federal Reserve and action by the

USD/CNY Fundamental Forecast – January 29, 2016

Analysis and Recommendation:

The USD/CNY was flat in the morning session at 6.5779 as traders reviewed comments from the Federal Reserve and action by the PBOC. Chinese government’s official news agencies published four articles to warn against speculation on the Chinese yuan and the Hong Kong Dollar.

On Jan. 23, Xinhua News published an English article: Chinese economic transition testing global investors’ wisdom, courage.

On Jan. 25, People’s Daily overseas edition published headline: Short China Speculators will eventually be failed by the market.

On Jan. 26, People’s Daily overseas edition published a front-page opinion: Declaring war on China’s currency? It sent out direct a warning that George Soros’ war on the Yuan and the Hong Kong Dollar cannot possibly succeed.

Late night on Jan. 26, Xinhua News published another article: China stays confident in face of speculators. The fact that four pieces were published in a row indicates that the Chinese government is serious in dealing with currency speculators.

Reuters said that the hedge funds are expecting capital outflows to pick up speed after the Chinese New Year holiday break in the second week of February.

“China has an opportunity now to allow a very sharp devaluation. The wise move would be to do it quickly,” Corriente chief Mark Hart said on Real Vision TV this month. Some have been betting against the yuan for almost two years, such as the London-based Omni Macro Fund, reported Reuters. The US-based Moore Capital Macro Fund also has a big bet on the falling yuan.

The Soros Moment is considered by many to be the most lucrative bet against a currency in history. In the 1990s, hedge-fund manager George Soros broke the Bank of England by shorting the British pound, which had a fixed rate of 2.7 German deutche marks to the pound, as a condition for entering the European Exchange Rate Mechanism. Soros borrowed heavily to bet on a devaluation of the pound. When the pound eventually plummeted and withdrew from the ERM, Soros walked away with more than $1 billion.

Chinese state media on Tuesday warned Soros and other “vicious” speculators against betting on yuan falls.

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 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:

Cur.	Event	Actual	Forecast	Previous
NZD	Interest Rate Decision	2.50%	2.50%	2.50%
NZD	RBNZ Rate Statement
NZD	Trade Balance (MoM) (Dec)	-53M	-131M	-799M
NZD	Trade Balance (YoY) (Dec)	-3,550M	-3,590M	-3,700M
JPY	Retail Sales (YoY) (Dec)	-1.1%	-0.1%	-1.0%

Upcoming Economic Events that you should be monitoring:

Friday, January 29, 2016

Cur.	Event	Actual	Forecast	Previous
NZD	Building Consents (MoM) (Dec)			1.8%
JPY	Household Spending (MoM) (Dec)		2.0%	-2.2%
JPY	National Core CPI (YoY) (Dec)		0.1%	0.1%
JPY	Tokyo Core CPI (YoY) (Jan)		0.1%	0.1%
JPY	Industrial Production (MoM) (Dec)		-0.3%	-0.9%
NZD	ANZ Business Confidence (Jan)			23.0
AUD	PPI (QoQ) (Q4)		0.6%	0.9%
AUD	Private Sector Credit (MoM)		0.6%	0.4%
JPY	BoJ Press Conference
EUR	German Retail Sales (MoM) (Dec)		0.5%	0.2%
EUR	Core CPI (YoY)		0.9%	0.9%
EUR	CPI (YoY) (Jan)		0.4%	0.2%
USD	GDP (QoQ) (Q4)		0.8%	2.0%
USD	Goods Trade Balance (Dec)		-60.00B	-60.50B
CAD	GDP (MoM) (Nov)		0.3%	0.0%
CAD	RMPI (MoM) (Dec)		-4.0%	-4.0%
USD	Chicago PMI (Jan)		45.0	42.9
USD	Michigan Consumer Expectations (Jan)		84.5	85.7
USD	Michigan Consumer Sentiment (Jan)		93.0	93.3