By FXEmpire.com
Introduction: For years, other countries have been asking China to let the yuan, also called then renminbi, to float more freely on the currency market. It appears that China is doing that now, with an announcement that the yuan will be allowed to float more freely against the US dollar.
China announced that it will allow the yuan to float a little more freely against the US dollar, allowing the currency to move one per cent to either side of the US dollar currency peg. The yuan will not be a truly free floating currency as a result of the new policy, but it will have a little more flexibility.
For years, Western countries, especially the United States, have charged that the Chinese undervalue their currency, keeping it artificially low against the US dollar. This allows for an edge in exports, as a weaker yuan makes goods cheaper to purchase by consumers in other countries. Many expect that if Chinese policymakers were to ever let the yuan freely float, it would appreciate quite quickly.
Weekly Analysis and Recommendation:
The USD/CNY ended the week at 6.3015 ahead of the US GDP numbers. Most of the week the yuan had traded lower against the USD. Prior data from China had shown a slowdown in economic growth and rising property prices. Investors are now beginning wonder if the US economy has hit a standstill.
|
Date |
Open |
High |
Low |
Change % |
|
|
Apr 27, 2012 |
6.3015 |
6.2962 |
6.3090 |
6.2920 |
0.08% |
|
Apr 26, 2012 |
6.2962 |
6.3025 |
6.3054 |
6.2951 |
-0.10% |
|
Apr 25, 2012 |
6.3025 |
6.3063 |
6.3090 |
6.3006 |
-0.06% |
|
Apr 24, 2012 |
6.3063 |
6.3067 |
6.3117 |
6.3011 |
-0.01% |
|
Apr 23, 2012 |
6.3067 |
6.3084 |
6.3101 |
6.3037 |
-0.03% |
Major Economic Events for the past week actual v. forecast
|
Core Retail Sales (MoM) |
0.5% |
1.0% |
-0.8% |
|
|
USD |
New Home Sales |
328K |
320K |
353K |
|
GBP |
GDP (QoQ) |
-0.2% |
0.1% |
-0.3% |
|
GBP |
GDP (YoY) |
0.0% |
0.3% |
0.5% |
|
USD |
Core Durable Goods Orders (MoM) |
-1.1% |
0.5% |
1.9% |
|
USD |
Interest Rate Decision |
0.25% |
0.25% |
0.25% |
|
NZD |
Interest Rate Decision |
2.50% |
2.50% |
2.50% |
|
USD |
Initial Jobless Claims |
388K |
375K |
389K |
|
USD |
GDP (QoQ) |
2.2% |
2.5% |
3.0% |
Economic Highlights of the coming week that affect the Yuan, Yen, Aussie and the Kiwi
|
Apr 29 |
9:00pm |
NZD |
NBNZ Business Confidence |
33.8 |
|
|
Apr 30 |
9:00pm |
CNY |
Manufacturing PMI |
53.6 |
53.1 |
|
May 1 |
12:30am |
AUD |
Cash Rate |
4.00% |
4.25% |
|
12:30am |
AUD |
RBA Rate Statement |
|||
|
10:00am |
USD |
ISM Manufacturing PMI |
53.0 |
53.4 |
|
|
May 2 |
8:15am |
USD |
ADP Non-Farm Employment Change |
179K |
209K |
|
6:45pm |
NZD |
Employment Change q/q |
0.5% |
0.1% |
|
|
6:45pm |
NZD |
Unemployment Rate |
6.2% |
6.3% |
|
|
May 3 |
8:30am |
USD |
Unemployment Claims |
382K |
388K |
|
10:00am |
USD |
ISM Non-Manufacturing PMI |
55.5 |
56.0 |
|
|
9:30pm |
AUD |
RBA Monetary Policy Statement |
|||
|
May 4 |
8:30am |
USD |
Non-Farm Employment Change |
176K |
120K |
|
8:30am |
USD |
Unemployment Rate |
8.2% |
8.2% |
Upcoming Government Bond Auctions
Date Time Country
May 01 09:30 UK
May 02 09:10 Sweden
May 02 09:30 Portugal
May 02 13:00 US
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May 03 08:50 France
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May 03 09:30 UK
May 08 09:15 Austria
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May 08 14:30 UK
May 08 15:30 Italy
May 08 17:00 US
May 09 09:10 Sweden
May 09 09:30 Germany
May 09 09:30 Swiss
May 09 09:30 UK
May 09 14:30 Sweden
May 09 15:30 Italy
May 09 17:00 US
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May 11 10:00 Belgium
Originally posted here
