FXStreet (Delhi) – Robin Brooks, Research Analyst at Goldman Sachs, suggests that just to underscore how unsettled markets are by a week of RMB depreciation, a meaningful positive surprise on payrolls failed to lift risk markets, US interest rates or the Dollar. Key Quotes “Cyclical outperformance is alive and well, but all that matters these days is whether the next $/CNY fix is a basis point or two above the level anticipated by the market. Let us make a belated new year’s resolution to focus on the fundamentals that are really driving things rather than what is in the end a small move in global currency markets. Not to belittle this week’s price action. Consecutively weaker $/CNY fixes early in the week scared markets and had them worried that this is the beginning of a largescale devaluation. In the event, Friday’s fix was substantially below the previous spot close, a deviation from the previous PBoC commitment to factor in the previous close. Conceivably, this deviation could signal a desire to settle down global risk and currency markets, suggesting that coming fixes might slow or even reverse the recent pace of depreciation. In today’s Daily, we interpret recent RMB moves, complementing our China team’s forecast revision for the RMB on Friday. The risk-off start to the year in equities, alongside the softness in the US rate market, have coalesced to hurt one of our Top Trades for 2016. We are closing a long large cap US banks through the BKX Index relative to the S&P500 on 11 Jan 2016, opened on 19 November 2015 at 100, with a potential loss of 5.4%. The week ahead is comparatively quiet in terms of data and events. After last week’s data on official reserves for December, which showed a drop in headline reserves of -$108 bn (closer to -$140 bn on a valuation adjusted basis), China’s trade and monetary aggregate releases will command attention this week. There are central bank meetings in the UK, Poland, Korea and Indonesia, while the main US data release will be retail sales for the month of December.” For more information, read our latest forex news.