Chinese Yuan: PMI weakness boosts easing expectations – Commerzbank
Commerzbank economist Dr. Henry Hao highlights that China’s private manufacturing PMI fell to 50.9 in July, reinforcing signs of slowing factory momentum alongside the official NBS PMI at 49.2.
Commerzbank economist Dr. Henry Hao has noted that China's private manufacturing PMI declined to 50.9 in July, supporting evidence of decelerating factory activity. The official NBS PMI also stood at 49.2. This further justifies expectations of forthcoming monetary easing, with markets anticipating potential LPR and RRR reductions.
Simultaneously, both USD/CNY and USD/CNH have appreciated to approximately 6.76. The private manufacturing gauge slipped to its lowest level in four months in July, indicating further deterioration in industrial momentum. The RatingDog survey's sub-component breakdown corroborates the weakening trend. The weaker-than-expected PMI readings significantly bolster the case for near-term monetary easing.
In foreign exchange markets, USD/CNY and offshore USD/CNH surged 30 pips and 60 pips respectively, reaching 6.76.
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