News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 89.57%, while traders in GBP/JPY are at opposite extremes with 69.65%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/QVIJOsuHtz
  • Heads Up:🇺🇸 Fed Daly Speech due at 17:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-05-11
  • Fed's Brainard: -Enhanced jobless benefits don't appear to be holding back job seeking -Good reason to think higher inflation will be transitory -Would not hesitate to act if inflation flared too much -Household balance sheets look 'extremely healthy,' doesn't see housing bubble
  • USD/CAD appears to be on track to test the September 2017 low (1.2061) after clearing the January 2018 low (1.2247). Get your $USDCAD market update from @DavidJSong here:https://t.co/wIA51KNqNz https://t.co/oREPYOH46E
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Silver: 0.75% Oil - US Crude: 0.06% Gold: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/nPjfZ8pcg5
  • Fed's Brainard: - Important to communicate clearly when substantial further progress on goals has been made - Says outlook is bright, expects to continue making progress on Fed goals, but still far from reaching that point - Labor demand and supply recovering at different speeds
  • ECB's Knot: - Banks have withstood covid stress test 'pretty well' - Ground for euro-area recovery is getting firmer - Pent up demand is 'significant' upside risk $EUR $EURUSD $EURGBP
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.31% 🇬🇧GBP: 0.24% 🇯🇵JPY: 0.24% 🇳🇿NZD: 0.07% 🇨🇦CAD: 0.06% 🇨🇭CHF: -0.14% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/rBmlc0ErCB
  • Fed's Brainard: -April jobs data was a reminder that the recovery will be uneven, hard to predict -Strong rebound in hiring still likely -Fed policy driven by economy's actual performance is right strategy -Temporary jump in inflation unlikely to undo longer trends
  • Fed's Brainard: -Inflation tough to predict, may be transitory -Important to stay patiently focused on reaching goals -Data shows price expectations well anchored at 2% -Fed has tools and will react if inflation accelerates too much -Supply/Demand bottlenecks add to uncertainty
Yuan Clarified by PBOC Governor, Waits for New Party Leaders

Yuan Clarified by PBOC Governor, Waits for New Party Leaders

Renee Mu, Currency Analyst
Yuan Clarified by PBOC Governor, Waits for New Party Leaders

Fundamental Forecast for CNH: Bullish

  • The PBOC’s Governor Zhou Xiaochuan clarified what will be floating and what will be managed in the Yuan.
  • Policymakers will disclose further reform plans at Party Congress, which may add bullish momentum to the Yuan.
  • A re-election of top party leaders will help to maintain stable administration and thus could support the Yuan.

The Chinese Yuan finished in the middle this week compared to major currencies: it gained against the JPY, CAD, NZD, and CHF while lost against the USD, EUR and GBP. China’s economic gauges released this week including the Q3 GDP as well as September fixed income reads sent out mixed signals about the economy. Next week, the Chinese calendar is light. To get more clues, investors will want to continue to watch the on-going 19th Party Congress meetings and press conferences scheduled over this weekend and early next week.

China is using a managed-floating exchange rate mechanism, unlike many Western countries. This week, the PBOC’s Governor Zhou Xiaochuan gave a latest update at the Party Congress on what to expect if you want to trade the Chinese currency. A) What matters to the regulator is – “The Yuan floating rate should be determined more by market supply and demand”, according to Zhou. This hints that the Chinese regulator will less likely go against a major trend, for instance, a Dollar strength driven by Fed rate hikes. To counter against a strong trend will need to heavily burn China’s foreign reserves, an unfavourable choice to the regulator.

In fact, Chinese regulators told multiple times that they have been closely watching USD prices. What’s the Dollar trend to year-end? See our Q4 forecasts.

B)What does not that matter to the regulator is – “Expanding Yuan’s trading band is not a priority”, told by Zhou. Currently, the onshore Yuan (CNY) is allowed to float within 2% above or below the PBOC’s reference rate. This means the regulator manually places a “stop” for onshore trades, in the effort to curb the risk of extreme volatility, and it has no intention to loosen it in the near future. The offshore (CNH) Yuan is not under such a restriction but because CNY and CNH are highly correlated, this trading band setup will limit offshore Yuan moves as well.

C) What the regulator wants to avoid is – “Preventing sudden and extreme moves is our primary focus on financial markets”. This is a general target for all Chinese financial markets but is also applied to the FX market. The PBOC introduced a counter-cyclical component in May in the daily reference rate formula, aiming to reduce the risk of overshooting, especially overselling in the Yuan. The USD/CNH has remained the bearish trend since then (bullish for the Yuan). Before the US Dollar gains enough momentum and forms a clear new trend, traders will want to be cautious about false breakouts in the USD/CNH, as Chinese regulators may step in until they see what we discussed in A).

There are more to expect from the 19th Party Congress. At 3am EST on Saturday, Chairman and Vice Chairmen from China’s National Development and Reform Commission will host a press conference and take questions. What to keep an eye on is how will the top policymakers promote reform and encourage domestic investment. China’s Q3 GDP came in at 6.8% as expected; the Yuan strengthened against the US. Dollar in the first three minutes of the release but then reversed and soon erased all gains. This is likely because of the disappointing September print of investment in fixed assets announced at the same time, which is 7.5% verse 7.7% expected and 7.8% prior.

Last but not least, new Party leaders will be announced after the Congress meetings ended on October 24th. It is expected that most current leaders will be re-elected for another 5-year term. A stable and sustainable administration is considered to benefit China more, as the country is already busy dealing with both internal and external unstableness. Thus, a re-election could be positive news to the Yuan. Also, from a technical perspective, the USD/CNH has retraced to the upper band of the downward channel, a pullback is more likely than a breakout.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES