Monthly forecasts

USD/CNY Monthly Fundamental – April 2016

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The USD/CNY dipped 1.57% to 6.449 as the PBOC raised its pricing as the US dollar weakened.  The impact of Fed comments this week from FOMC Chair Yellen and Chicago Fed President Evans confirming the central bank is forecasting 2 rate hikes this year rather than 4 while seen as dovish, has also helped to clear the air and clarify expectations. Not only has this helped to build support for US shares in terms of ongoing cheap money but it has been knocking USD back, taking some of the pressure off of US corporate earnings prospects.As such, the People’s Bank of China set the midpoint rate at its strongest this year at 6.4612 per dollar prior to market open on Thursday, 0.35 percent firmer than the previous fix of 6.4841. In the spot market, the yuan opened at 6.4640 per dollar and was changing hands at 6.4662 at midday, strengthening 0.06 percent from the previous close. The yuan is now within striking distance of its 2016 peak of 6.4559 set on March 18. If the Chinese currency closes around the midday level, it would have climbed 0.4 percent for the quarter – its biggest quarterly gain since the quarter ended September 2014. The yuan is also set to finish 1.3 percent firmer for the month, the largest monthly gain in five years. “Trading was active in the morning as the firmer midpoint today was in line with market expectations,” said a trader at a Chinese commercial bank in Shanghai. “I believe depreciation pressure on the yuan will further ease in April and May, as a Fed interest rate hike remains unlikely. This also means less pressure on the PBOC.” Onshore one-year yuan/dollar deliverable forwards were quoted at 6.5189 around midday. That implies expectations that the yuan will depreciate less over 12 months than was implied by Tuesday’s close of 6.5338.In an effort to punish speculation against the yuan, the People’s Bank of China in January imposed a reserve-requirement ratio on overseas banks’ yuan deposits held by onshore lenders. Offshore banks had previously faced a zero percent required reserve ratio on their yuan deposits on the mainland. As of Jan. 25, those funds were subject to the same ratio as Chinese banks.“The reserve-ratio requirement is based on the account balance at the end of every quarter, so banks are trying to lend out as much as they can to reduce the amount of money that will be locked up for three months,” said Becky Liu, Hong Kong-based senior rates strategist at Standard Chartered Plc. “Overall liquidity conditions are very flush in the offshore yuan market.”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.usdcny mEconomic Events You Should Be Monitoring This Month:

Cur.EventForecastPrevious
Friday, April 1, 2016
  JPYTankan Large Manufacturers Index812
  CNYManufacturing PMI (Mar)49.349.0
  CNYCaixin Manufacturing PMI (Mar)48.248.0
  EURGerman Manufacturing PMI (Mar)50.450.4
  GBPManufacturing PMI (Mar)51.250.8
  USDNonfarm Payrolls (Mar)205K242K
  USDUnemployment Rate (Mar)4.9%4.9%
Monday, April 4, 2016
China – Tomb Sweeping Day
  AUDRetail Sales (MoM) (Feb)0.3%
  GBPConstruction PMI (Mar)54.2
Tuesday, April 5, 2016
  AUDInterest Rate Decision (Apr)2.00%
  GBPConstruction PMI (Mar)54.2
  GBPServices PMI (Mar)52.7
  USDISM Non-Manufacturing PMI (Mar)54.153.4
Wednesday, April 6, 2016
  GBPServices PMI (Mar)52.7
  CADIvey PMI (Mar)53.4
Friday, April 8, 2016
  GBPManufacturing Production (MoM)0.7%
  CADEmployment Change (Mar)-2.3K
Monday, April 11, 2016
  CNYCPI (YoY) (Mar)2.3%
Tuesday, April 12, 2016
  GBPCPI (YoY) (Mar)0.3%
Wednesday, April 13, 2016
  CNYTrade Balance (USD) (Mar)32.59B
  USDRetail Sales (MoM) (Mar)-0.1%
  CADInterest Rate Decision0.50%
Thursday, April 14, 2016
  AUDEmployment Change (Mar)0.3K
  EURCPI (YoY) (Mar)
  GBPInterest Rate Decision (Apr)0.50%
Friday, April 15, 2016
  CNYGDP (YoY) (Q1)6.8%
  CNYIndustrial Production (YoY) (Mar)5.4%
Monday, April 18, 2016
  NZDCPI (QoQ) (Q1)-0.5%
Tuesday, April 19, 2016
  EURGerman ZEW Economic Sentiment4.3
Wednesday, April 20, 2016
  GBPClaimant Count Change (Mar)-18.0K
Monday, April 25, 2016
Friday, April 29, 2016

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