Stronger-than-expected June PMI data reduces urgency for monetary easing as USD/CNY falls below its 50-day moving average.
China’s official manufacturing PMI rose to 50.3 in June from 50.0, exceeding expectations, while non-manufacturing PMI climbed to 50.2 from 50.1. The data signals slow but steady growth, reducing pressure on the People’s Bank of China to ease policy further.
The yuan’s strength reflects robust exports, partly driven by global AI demand, pushing the trade-weighted CEFTS RMB Index to its highest level since July 2022. USD/CNY dropped below 6.7938, its 50-day moving average, following weaker-than-expected US nonfarm payrolls data.
Domestic focus shifts to the upcoming Politburo meeting, with regulators tightening oversight on high-yield bond fundraising to curb excessive debt, particularly among local government financial vehicles.