USD/CNH refreshes intraday high to $6.4726, up 0.11% intraday around $6.4710 by the press time of early Monday. In doing so, the Chinese currency (CNH) pair reacts to the latest sluggish activity numbers from China as well as covid fears.
During the weekend, Chinas official activity data for July, namely NBS Manufacturing PMI, grew by the slowest pace in 17 months, below 50.8 forecast to 50.4. Following that, Caixin Manufacturing for July dropped below 51.3 prior and 51.0 expected to 50.3.
It should be noted that China‘s central bank reiterated its bearish bias towards the monetary policy during the weekend. “China will maintain a prudent, flexible and targeted monetary policy in the second half of 2021 to support economic growth,” the People’s Bank of China (PBOC) said in a statement over the weekend per Reuters
In addition to the downbeat activity numbers, the recently spreading Delta covid variant fears in the Asian major also weigh on the CNH prices. “China reported on Monday 98 new confirmed coronavirus cases in the mainland for Aug. 1, compared with 75 a day earlier, according to the National Health Commission,” said Reuters.
Amid these plays, Chinas government bond yields fell to their lowest in more than a year. That said, the 10-year coupon drops to 2.80% by the press time.
On the other hand, US 10-year Treasury yields drop 1.7% basis points (bps) to 1.22% whereas the S&P 500 Futures gains 0.39% as we write.
It‘s worth noting that amid the coronavirus woes, US policymakers’ haggling over the infrastructure spending bill and expectations that it will be passed this week seems to keep market players hopeful
However, todays US ISM Manufacturing PMI for July, expected 60.8 versus 60.3 prior, will be observed closely for near-term direction.
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