4 Nov 2015
CNY: Rebound sign in services PMI but too soon to say all is well - MUFG
FXStreet (Delhi) – Derek Halpenny, European Head of GMR at MUFG, notes that the Caixin Services PMI report revealed some good news today in China with the index jumping from 50.5 in September to 52.0 in October, following two months of decline.
Key Quotes
“New orders increased at a faster pace and were “solid overall”. It might make sense to conclude that recent actions by the Chinese authorities to implement supportive growth policies are now becoming evident in the data. However, these readings are volatile and when we smooth the indices over a 3mth period, the Caixin services index is still moving lower – so the trend of deceleration is still in place and we will need to see further improvement before making any conclusions.”
“Still, from a broader global macro/financial market perspective, the improvement in the Ciaxin data will add to the view that the Fed is less concerned over “international developments” that were a key reason for delaying a rate increase back in September. Better news from China reinforces Fed rate hike expectations and helps support the dollar. USD/CNY and USD/CNH have remained broadly stable.”
Key Quotes
“New orders increased at a faster pace and were “solid overall”. It might make sense to conclude that recent actions by the Chinese authorities to implement supportive growth policies are now becoming evident in the data. However, these readings are volatile and when we smooth the indices over a 3mth period, the Caixin services index is still moving lower – so the trend of deceleration is still in place and we will need to see further improvement before making any conclusions.”
“Still, from a broader global macro/financial market perspective, the improvement in the Ciaxin data will add to the view that the Fed is less concerned over “international developments” that were a key reason for delaying a rate increase back in September. Better news from China reinforces Fed rate hike expectations and helps support the dollar. USD/CNY and USD/CNH have remained broadly stable.”