USD/CNY Fundamental Forecast – March 15, 2016

Analysis and Recommendation:

The USD/CNY is holding at 6.4953 near the top of its trading range as the government assures markets that it is ready to help keep market volatility low and push for economic growth.  Manufacturers and stores in China put in weaker-than-expected performances in the first two months of the year, as anemic demand and excess capacity continued to bear down on the world’s second-largest economy.

Industrial production grew 5.4 per cent in January and February compared with a year earlier, down from December’s 5.9 per cent pace, according to government data released Saturday, and just below the 5.6 per cent forecast by economists polled by The Wall Street Journal. Meanwhile, retail sales clocked 10.2 per cent growth in the two-month period, slower than December’s 11.1 per cent increase.

While industries have been battered by the economic slowdown, retail sales have been relatively buoyant, so the downtick surprised some economists, especially since it occurred around the Lunar New Year holiday when consumption is usually strong.

Economists said, weak demand at home and abroad is weighing on industries and many factories continue to churn out unneeded goods. Jiang Yuan, an economist with China’s National Bureau of Statistics, said makers of steel, cement and tobacco reduced output in response to slack demand.

In China, central bank Governor Zhou Xiaochuan said “excessive” stimulus wouldn’t be required to achieve the nation’s growth goal of at least 6.5 per cent over the next five years, even after the weak factory output and retail data and a report showing the broadest measure in new credit dropped.

“China’s weekend data was underwhelming,” Kimberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd, said in a note e-mailed to clients.

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:

 

Upcoming Economic Events that you should be monitoring:

Tuesday, March 15, 2016

Government Bond Auctions

Date Time and Country

Mar 16 11:03 Sweden Holds bond auction

Mar 16 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Mar 17 10:30 Spain Holds bond auction

Mar 17 11:50 France Holds bond auction

Mar 17 19:00 US Holds 10-year TIPS auction