The RMB sneaks in ahead of the Federal Reserve

El EURUSDFor example, it seems to have no desire, at least in the short term, to try to break through 1,05 again. The record rise on December 3rd – 4,15% in a single day – has weakened the dollar, leaving the EUR/USD pair comfortably around 1,10. emerging currencies They are also in turmoil: the 18% drop in oil Following OPEC's decision on December 4th not to cut production, currencies most closely linked to the price of crude oil have been particularly hard hit. COP It has accumulated a loss of 8,50% against the EUR in the last two weeks; the RUB, of 8,30%; the MXN, of 7,60%.

The RMB has once again become the focus of attention in the market this week, touching its lowest levels of the year against the USD, around 6,55. Over the past month, the selling trend has regained hold on the RMB, and it seems that Chinese authorities are now more receptive to lower RMB levels. In fact, the RMB has already accumulated a drop of nearly 5,5% against the USD so far this year. Additionally, last Friday we learned of another change in the exchange rate policy by the People's Bank of China. The USD/RMB exchange rate will no longer be the sole benchmark for determining the value of the RMB, instead being used to estimate its value based on a basket of currencies. Some have interpreted this as a further step towards the complete liberalization of the Chinese exchange rate.

Tomorrow, Wednesday, the Federal Reserve decision at its December meeting. The market has fully priced in one first rate hikeIf the Federal Reserve ultimately does not raise benchmark interest rates, it would be a major surprise; and it would surely have a negative impact on financial markets, as well as constitute a significant loss of credibility for the Federal Reserve itself.

With all market focus The market is already anticipating the number of rate hikes the US Federal Reserve might implement next year. In this regard, the market sees two to three hikes as the most likely scenario in 2016. This Wednesday, we will learn the Federal Reserve's detailed forecasts for the future evolution of interest rates. The key to the dollar's future performance lies in this.

FOCUS OF THE WEEK

Main events from December 15 to 22.

December 15, USA —————— Inflation

December 16 EUR ——————– Business Sentiment

December 16, USA —————– Federal Reserve Meeting

17 DEC UK ——————— Retail Sales

17 DEC EUR —————— Business Sentiment

DEC 22 USA ————— IFO GDP

EUR/USD FORECASTS