China: Few months from running out of ‘spare’ FX reserves – SocGen

Albert Edwards, Research Analyst at Societe Generale, notes that China has burned through almost $800bn of its FX reserves mountain since it peaked at almost $4 trillion in mid-2014.

Key Quotes

“January’s FX data to be released this weekend is set to register another sharp drop of $120bn (consensus estimate). But at $3.2 trillion, the market remains content that massive firepower remains to support the renminbi. It does not.

Our economists estimate that when FX reserves reach $2.8 trillion – which should only take a few more months at this rate – FX reserves will fall below the IMF’s recommended lower bound.

If that occurs in the next few months, expect to see a tidal wave of speculative selling, forcing the PBoC to throw in the towel and let the market decide the level of the renminbi exchange rate.”

Albert Edwards, Research Analyst at Societe Generale, notes that China has burned through almost $800bn of its FX reserves mountain since it peaked at almost $4 trillion in mid-2014.

(Market News Provided by FXstreet) [...]

USD/JPY rejected at 117, reverts to 2-week lows

The recovery in the USD/JPY pair from two-week lows faltered just a thread-line short of 117 handle and the prices fell back in the red towards 116.50 levels.USD/JPY retests near two-week lows The major failed to take out 117 handle and ran through fre... [...]

US non-farm payrolls preview – RBS

Research Team at RBS, suggests that the three-month moving average of US non-farm payroll growth surged to +284K in December, its highest since January 2015.

Key Quotes

“But while we expect labor market gains to continue at a solid pace, that trend may prove unsustainable into January. Our trading desk economists forecast non-farm payroll growth of 180K in January, slightly below the listed consensus and well below December’s 292K surge.

The bulk of that decline, is centered in just three sectors – transportation and warehousing, professional business services, and government employment. Less supportive base effects in January may mean that the average hourly earnings growth rate in January dips from 2.5% y/y to 2.2% y/y, even though our economists look for a relatively firm +0.3% m/m advance in earnings. The unemployment rate may dip below 5.0% for the first time since 2007 (RBSe 4.9%).”

Research Team at RBS, suggests that the three-month moving average of US non-farm payroll growth surged to +284K in December, its highest since January 2015.

(Market News Provided by FXstreet) [...]