Author: Mike Paterson

This and other comments made by PBOC gov Zhou Xiaochuan published by Caixin

  • dismisses speculation that China will issue capital controls
  • plays down concerns over diminishing forex reserves
  • defends the PBOC over lack of transparency

In his first interview for many months  Mr Zhou dismissed speculation that Beijing would tighten capital controls and tried to ally fears that falling reserves should cause concern.

"It is normal for foreign reserves to rise and fall as long as the fundamentals face no problems,.At the moment the level of cross-border capital flows is within the normal region.We need to differentiate between capital outflow and capital flight."

He also stressed that Beijing's strategy did not include further devaluations to boost exports.

"The total trade surplus in 2015 was close to $600bn and net export's contribution to GDP was not low so there's no motive to depreciate the renminbi for the sake of net export expansion," 

He condemned "speculators" for targeting the renminbi, adding that "China will not let market sentiment be dominated by these speculative forces".

Mr Zhou reiterated that the trend is to:

 "rely further on the market to decide the level of the currency and to achieve a more flexible foreign exchange rate". "The bank will use a basket of currencies as a reference and appropriately manage any daily volatility in the renminbi against the dollar as well as using a wider range of economic data, There is no basis for devaluation".

Zhou also defended the bank against accusations that Beijing lacked transparency in its management of the economy.

 "The central bank is neither a god nor a magician, there is no way that we can wipe out all uncertainties". "Sometimes, the central bank has to say, 'Sorry, we have to wait for new data'.

Full (gated) FT article here. South China Morning Post has this (ungated)

China and various other markets have been closed for Lunar Year holiday but they're heading back tonight/tomorrow and traders will be keen to see the impact their return makes in these fragile times.

Data due first off the rank is:

  • January new yuan loans, expected is 1830.0bn CNY, prior was 597.8bn
  • Aggregate financing RMB for January, expected is 2200.0bn, prior was 1820.0bn
  • Money supply M0 (Jan) y/y: expected is 5.2%, prior was 4.9%
  • Money supply M1 (Jan) y/y: expected is 14.2%, prior was 15.2%
  • Money supply M2 (Jan) y/y: expected is 13.5%, prior was 13.3%

It's going to be another interesting week ahead so tighten your seat belts. Our man Eamonn will  be along later to guide you through the early trading.

                                  Zhou- PBOC is neither God or magician

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Author: ForexLive
18

In FX, pro traders are dying, retail traders rising

By Boris Schlossberg at BKForex At the beginning of last week, Bloomberg ran a long story mourning the demise of the bank FX trader. "Take the pay cut, " warned one veteran darkly. "Oh, and don't wait for the phone to ring."The computers have taken over. The algos now do most of the market making and HFT firms like Virtu dominate flow whittling margins to a tenth of pip. Long gone are the days when you could take your mates for a beer and get preferential treatment on client flow. Or better yet when you could simply markup deals 20 pips or more for "non market" sensitive customers like corporates, pension funds and equity mutual funds. It was a great party while lasted, built on insider info, expense accounts and very little economic value.Dealing FX still remains a cheaters game. Banks continue to pay their multi billion dollar fines for rate fixing and proceed in their tricks and treats. But the party is clearly coming to an end. Customers are much smarter, everyone has access to price information and competition has become fierce. FX will never be a totally clean market until it goes on exchange but it's good enough at this point so that retail traders can play the game on mostly level playing field.And therein lies the irony. The very same technology that is killing the pro trader is enabling the retail trader to compete effectively in that most unforgiving of arenas -- the FX day trading market. Right now as I sit and type this, I am looking at nine screens that give me the following services all for free:Streaming dealable quotes as tight at 1/10th of a pip on euro and yen and 1/2 pip on cable. Just a few years ago I was paying as much as 5 pips spread for GBP/USD and now that's often my profit on a trade.Live Squawk box out of London that keeps me up to date on all the breaking macro and central bank news, so I can react quickly to any potential action.An RSS feed from my buddies at ForexLive that gives me color on the market 7 days a week.Charts, Charts, Charts -- you name it you can have it and all for either free or a few bucks per month.A Live News Applet that gives me eco data as quickly as a Bloomberg terminalMT4 -- my very own algo machine that lets me manage my trade inventory at the speed of light and takes all the sloppy trade entry/logic out of my fumbling hands.Last but certainly not least -- Slack. The greatest software of the 21st century that allows me to trade in a chat room with traders from all over the world 24 hours a day 5 days a week. All of our trades are instantly uploaded into the room and we can discuss, analyse and get inspiration from each other -- just like a dealing floor but only better.So as I observe the market changes over the past decade, I can honestly say -- it's only getting better.Trade with us, join BKForex.

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Author: Greg Michalowski
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Author: Adam Button
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Author: Greg Michalowski

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