Why 11.15am looms as the most important moment in today's trading session

There’s a lot of economic data out today, along with a heap of Australian corporate earnings.

China will release industrial production, retail sales and fixed asset investment figures for July.

Consumer confidence and wage data will be released in Australia, while revised industrial production figures are on the way from Japan.

Australia’s largest stock by market capitalisation, the CBA, has also just released a record profit result.

However, come 11.15am AEST (9.15am Beijing time), they’ll likely be trumped by an event that all assets were impacted by yesterday – the PBOC’s yuan fixing in China.

Following yesterday’s shock 2% currency depreciation from the PBOC, along with the news that they intend to let market forces play a far greater role in determining its level, all eyes will be glued to the screens to see what happens next.

The PBOC – based on statements released yesterday – will fix the yuan this morning using quotations received from market participants based on the closing level yesterday.

On Tuesday spot USD/CNY closed at 6.3250, above the fixing level of 6.2298 seen earlier in the morning.

On Monday the PBOC fixed the yuan at 6.1162.

Given the market reaction to the yuan weakness yesterday – almost all asset classes bar the US dollar and bonds weakened – a fixing near yesterday’s close of 6.3250, along with further weakening of the yuan in early trade, will potentially see risk assets come under further selling pressure.

Based on sentiment expressed by market participants and social media early Wednesday, many are expecting this to occur.

This, of course, could potentially see a “risk on” session ensue should it fail to eventuate.

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