It is all about China – Socgen

By FXStreet FXStreet (Barcelona) – Kit Juckes, economist at Societe Generale explained that the big market issue this weekend was whether the Chinese authorities can restore confidence in their ability to manage an orderly adjustment of the Yuan.

Key Quotes:

“China claims ‘healthy’ financial system” makes the front page of the FT today and Wolfgang Munchau’s piece “Free capital flows can put economies in a bind” cites Helene Rey, who in 2016 may be to global macro economics what Tomas Piketty was to labour economics in 2014.”

“The stock answer to the question of what happens next is that the economy’s ‘bumpy landing’ continues, while the administration will probably regain control of its currency adjustment (ie, at some point slow the pace of depreciation vs the dollar and make sure it doesn’t fall sharply relative to its basket).”

“But even if China’s some way from the inconsistent quartet of free trade, free capital mobility, independent monetary policy and a fixed exchange rate, they have moved closer and will struggle to find consistent policies. Nervousness across Asian markets and fear of bigger capital outflows and a bigger FX move are going to go on haunting markets.”
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Source:: FX Street