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. The weaker data strengthen the case for near-term monetary easing, with markets increasingly pricing in LPR and possible RRR cuts, while USD/CNY and USD/CNH both moved higher to around 6.76.

China slowdown supports policy easing

"China's private manufacturing gauge slipped to a four-month low in July, adding to signs that industrial momentum is deteriorating."

"Taken together, the two surveys signal that China's manufacturing sector is losing momentum, across both large and private-sector firms."

"The sub-component breakdown of the RatingDog survey reinforces the softness."

"The weaker-than-expected PMI readings materially strengthen the case for near-term monetary easing."

"In FX, USD/CNY and offshore USD/CNH rose 30 pips and 60 pips respectively to 6.76 yesterday."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)