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. See our updated Privacy Policy here.

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
More View more
Real Time News
  • Heads Up:🇦🇺 Retail Sales MoM Final (JUN) due at 01:30 GMT (15min) Expected: -1.8% Previous: 0.4% https://www.dailyfx.com/economic-calendar#2021-08-04
  • The US Dollar could lose some ground against ASEAN currencies such as the Singapore Dollar and Thai Baht amid slowing Emerging Asia Covid case growth. Softer US NFPs may also bode well.Get your market update from @ddubrovskyFX here:https://t.co/jnJ80hQR4P https://t.co/n8UXm0mUeb
  • This week's non-farm payrolls (NFP) will likely be key to gauge the direction of gold as markets look ahead to the Jackson Hole Economic Symposium. Get your market update from @FxWestwater here:https://t.co/WmTrqe0xJN https://t.co/BO2uwXMAko
  • Will be discussing the Japanese #Yen and what you can expect throughout this week in about 15min! Signup for the webinar in the link below! https://t.co/Jbtd2hc5nU
  • Please join @ddubrovskyFX at 20:00 EST/00:00 GMT for a webinar on what other traders' buy/sell bets say about price trends. Register here: https://t.co/AzOQioRZER https://t.co/uy1tAhiwGY
  • RT @FxWestwater: $NZDUSD Wedge Breakout Back in Play on Stellar Q2 Jobs Report Link: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/08/03/NZDUSD-Wedge-Breakout-Back-in-Play-on-Stellar-Q2-Jobs-Report.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https://t.co/YAIqqu5RDB
  • 🇦🇺 Markit Services PMI Final (JUL) Actual: 44.2 Previous: 56.8 https://www.dailyfx.com/economic-calendar#2021-08-03
  • $AUDNZD likely to attempt closing at a new 2021 low over the remaining 24 hours following the stellar New Zealand jobs report The December 2020 low has been further exposed at 1.0418 since July's #RBNZ rate decision New Zealand bond yields on the rise https://t.co/ipjwkSNt9n https://t.co/ncQX4hL8G3
  • Strong jobs report lifts $NZD - Money markets pricing in a 93% probability of a 25bps hike at the August meeting (previously 77%) - Over the forecast horizon, the RBNZ had projected (in the May MPS) the unemployment rate to gradually fall to 4.3% https://t.co/G5Ejzl2H6L
  • #NZDUSD cautiously higher after solid New Zealand jobs report Unemployment rate declined to 4.0% in Q2 from 4.7% prior (vs 4.4% anticipated) Job gains were at 1.7% y/y vs 1.2% expected Data seems to be supporting the case for a less-dovish #RBNZ given the cease to QE recently https://t.co/XmzhuLXh1H
Chinese FX Reserves Expected to Fall to Lowest Level Since 2012

Chinese FX Reserves Expected to Fall to Lowest Level Since 2012

Chief Currency Strategist John Kicklighter, Daniel Dubrovsky,

Talking Points:

  • January Chinese foreign reserves expectedto drop to $3210.0 billion, lowest since 2012
  • The People’s Bank of China has been fighting Yuan depreciation for months
  • Increased volatility from the Yuan exchange rate could bode ill for public officials

Find key turning points for the USD/CNH with DailyFX SSI

In December, Chinese foreign reserves declined 3.1 percent bringing the total amount to $3330.36 billion. This is the lowest amount of FX reserves held by China since December 2012. That is also the biggest percentage drop since December 2003. Economists are expecting the world’s second largest economy to reduce its foreign reserves even further to $3210.0 billion in January 2016 and further accelerating the pace of outflows. The data is due to be released Monday morning (February 7th) in China.

Currently, the US Dollar is the primary reserve currency in the international market. In application, a central bank can help prop-up its currency against the greenback by spending its FX reserves. As Currency Strategist Ilya Spivak mentioned, the People’s Bank of China has been fighting various financial pressures including Yuan depreciation by spending its FX reserves since mid-2014. Reflecting the funding effort, foreign reserves have continued to deplete, with January expected to be the largest decrease since 2003.

Back in August, the PBOC changed the way it sets the Yuan-Dollar exchange rate. At the same time, the new fixing rate policy appeared to amplify capital flight. Chinese officials have attempted to curb the repatriation to avoid the appearance of concern. Using reserves to soften the blow of capital outflows is not an uncommon monetary measure for emerging markets, however, China’s influence as the world’s second largest economy magnifies the influence.

As can be seen on the chart below, the velocity of FX reserve spending has increased. The most recent report showed that foreign reserve spending sped up at its fastest level since 2003. China does have a large amount of FX reserves, but the dry powder is not limitless. The country will need funds for normal market operations as well as a variety of financial uncertainties that could trouble the actively balanced financial system.

Chinese FX Reserves Expected to Fall to Lowest Level Since 2012

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

DISCLOSURES