Morning Wrap by Decoder – 20 Nov 13

• HK/CN – PBoC outlines future for renminbi, investor quotas. China will widen the renminbi’s trading band, continue to increase quotas for its investor programs for qualified institutions and individuals and eventually remove them. Basically, the government will get its nose out of the foreign exchange market, according to Bberg – quoting PBoC governor Zhou XiaoChuan. Shou was elaborating on financial reforms announced by the Communist Party after its recent plenum. The Central Bank will continue to increase the quotas under the qualified domestic institutional investor and qualified foreign institutional investor programs and eventually scrap them. Observers see the move as a signal China wants a faster development of a market-drive exchange rate regime. It’s also good timing as the US is unlikely to taper QE anytime soon. The chance of renminbi depreciation will remain low. –
• Alibaba targets to list in HK as early as 2014, MA said.

• US markets ended the choppy session marginally lower ahead of Bernanke’s speech with OECD cutting the global growth forecast (2013: 3.1% to 2.7%, 2014: 4% to 3.6%). Sector wise, energy and healthcare fare better while utilities/industrial/consumer lagged. € bid after ECB board member Asmussen said that ECB still has tools it can use to bolster the EU’s economic growth before they have to resort to cutting benchmark rates again (€ traded to a 4 yrs high against the ¥). Bernanke said on Tuesday that the short term rates may stay low “well after” the jobless rate falls below the targeted 6.5%. He added that the officials will look at a broader set of indicators of labor market health such as measures of payroll employment/labor force participation/rates of hiring & separation when that happens. He reemphasized that the Fed will likely to keep Fed fund rates very low for “quite some time” even after the end of QE3, providing support for the EURUSD pair.