IC Markets
Chinese New Year is the largest holiday in the region, and mainland Chinese markets close for roughly a week. During that window, onshore yuan (CNY) trading effectively stops, and the offshore yuan (CNH), which retail brokers offer, loses a major source of its liquidity and its pricing anchor. The result is a thinner, more volatile USD/CNH market for about a week, plus reduced activity in other regional pairs and gold.
What closes and when
Mainland China's markets and banks close for the CNY holiday, typically a full week (the exact dates shift each year with the lunar calendar, usually late January or February). Hong Kong also closes for the first two to three days. Onshore yuan trading is suspended for the mainland holiday. The offshore CNH market keeps trading, but with mainland participants absent and Hong Kong partly closed, the depth is a fraction of normal.
| Market | CNY holiday status | Effect on USD/CNH |
|---|---|---|
| Mainland China (CNY, onshore) | Closed ~1 week | No onshore anchor for the offshore rate |
| Hong Kong | Closed first 2-3 days | Further reduced offshore liquidity early |
| Offshore CNH | Trades throughout | Thin, spreads wide, moves exaggerated |
| PBOC daily fixing | Suspended during the mainland holiday | No daily signal; resumes with a potential jump |
How the market behaves
Three things happen. First, the USD/CNH spread widens, often to two or three times its normal level, because far fewer banks are quoting. Second, moves get exaggerated: with the onshore anchor gone and thin books, a modest flow can push USD/CNH further than it would normally, and there is no fixing the next morning to correct it. Third, when the mainland reopens and the PBOC sets its first fixing after the break, there can be a sharp adjustment as the offshore and onshore rates re-converge and the accumulated week of news gets priced in one go.
Zhang used to keep his normal USD/CNH position through the CNY week and was caught out twice: once by a 200-pip drift on thin liquidity that hit his stop at a bad fill, once by the reopening jump when the first post-holiday fixing came in firm and the pair gapped. He now flattens USD/CNH before the holiday and does not re-enter until the mainland has reopened and the first fixing has printed. He treats the whole week as a no-trade zone for that pair.
The knock-on effects
It is not only USD/CNH. Regional activity generally drops during the CNY week: AUD pairs are quieter because a lot of Australia-China trade flow pauses, and gold can see reduced physical demand from China even as the offshore paper market keeps trading. Overall it is a lower-conviction week for anything with a China or regional angle, and several major desks scale back.
How to handle the week
- Flatten USD/CNH and any China-sensitive position before the mainland holiday begins.
- If you must hold something, size it half of normal and use a wider stop for the thin-market slippage.
- Do not re-enter USD/CNH until the mainland has reopened and the first PBOC fixing after the break has printed.
- Expect wider spreads across regional pairs and lower reliability in technical setups for the week.
- Watch the reopening: the first day back can produce an outsized move as a week of news gets absorbed.
The exact CNY dates change every year with the lunar calendar. Check the specific dates ahead of time and mark the mainland closure and the Hong Kong closure separately, since they differ.
Frequently asked
Does forex close for Chinese New Year?
The global forex market stays open, but mainland Chinese markets and banks close for about a week, onshore yuan trading is suspended, and offshore CNH liquidity drops sharply. Other regional activity also slows.
What happens to the PBOC fixing during CNY?
It is suspended for the mainland holiday. When the mainland reopens, the first fixing after the break can produce a sharp move as the offshore and onshore rates re-converge and a week of news is priced in.
Should I trade USD/CNH during Chinese New Year?
Most traders avoid it. Spreads widen to two or three times normal, moves get exaggerated in the thin market, and there is no daily fixing to anchor the rate. Flatten before the holiday and wait for the mainland to reopen.
How long is the Chinese New Year holiday?
Mainland China typically closes for a full week (dates shift with the lunar calendar). Hong Kong closes for the first two to three days. Check the specific dates each year.
Does CNY affect gold or AUD?
Gold can see reduced Chinese physical demand during the week, and AUD pairs are quieter because Australia-China trade flow pauses. Both effects are modest compared with the USD/CNH liquidity drop.