USD/CNY Weekly Fundamental Analysis – March 28- April 1, 2016 -Forecast

The USD/CNY gained 0.67% to trade at 6.5147 as the US dollar strengthened. The People’s Bank of China weakened its daily reference rate for the yuan by 0.9 percent in the period from March 18, breaking a three-week strengthening run, as the dollar rebounded. Policy makers wouldn’t want to see excessive strength in the exchange rate as the economy slows and capital leaves, according to Commerzbank AG. The yuan is expected to drop 7 percent over the next year, Pacific Investment Management Co. economists wrote in a report.

PBOC Governor Zhou Xiaochuan said this week that Chinese officials want to gradually increase the use of the IMF’s Special Drawing Rights, and that the funding tool can help control risk and reduce volatility. The yuan is set to enter the basket on Oct. 1. The volatility in the yuan’s exchange rate is probably due to the events of last August, PBOC adviser Huang Yiping said at the Boao Forum. The central bank wasn’t thinking about weakening the currency but just trying to allow more market forces in the yuan rate, he added.

China’s changing of the way it reports its foreign exchange data has brought it into line with international practice but the timing appears to have worsened the market’s appetite for yuan assets.

The data – forex purchase position – measures how much foreign currency is sold or bought by both the central bank and commercial financial institutions. It was replaced with data that captures only the central bank’s forex purchases

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 

Mar 28 19:00 US Holds 2-year notes auction

Mar 29 19:00 US Holds 5-year notes auction

Mar 30 11:03 Sweden Holds bond auction

Mar 30 11:10 Italy Holds bond auction

Mar 30 11:30 Germany Eur 4bn Apr 2021 Bobl

Mar 30 19:00 US Holds 7-year notes auction

Mar 31 17:20 Sweden Details of I/L auction on Apr 07

Apr 01 N/A Italy Details of new BTP€i on Apr 04