Yuan Rises Despite Downbeat PMI Data; Fed’s Next Move in Focus
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By Alex Ho
Investing.com - The Chinese yuan rose against the U.S. dollar on Monday in Asia despite the release of downbeat manufacturing data.
The USD/CNY pair lost 0.3% to 6.9687 by 11:35 PM ET (03:35 GMT). The Caixin/Markit Manufacturing Purchasing Managers’ Index came in at 40.3 for February, which was its lowest reading since the survey was launched in early 2004.
Data on Saturday showed China’s official manufacturing PMI contracted at its fastest ever in February, even worse than during the global financial crisis of 2008.
The People's Bank of China has set the Yuan reference rate at 6.9811 today versus Friday's fix at 7.0066.
Meanwhile, the U.S. dollar index dropped 0.2% to 97.927.
Some believe the Federal Reserve might ease monetary policies from over the next few months after Fed Chairman Jerome Powell issued a rare statement on Friday pledging to “act as appropriate” to support the economy
Several Fed speakers are due to make appearances this week, Including Cleveland Fed President Loretta Mester, St. Louis Fed chief James Bullard, Dallas Fed head Robert Kaplan, Minneapolis Fed President Neel Kashkari and New York Fed President John Williams (NYSE:WMB).
“Markets are trying to “price-in” an event for which there is no readily known precedent. Volatility will rule until COVID-19-related risks reverse course,” said John Lonski, chief economist with Moody’s Capital Markets Research, in a note to clients.
However, he warned that “by themselves, Fed rate cuts will not remedy the COVID-19 virus. “What the Fed can do is help to facilitate access to financial capital for those households, businesses and local governments that incur cash flow problems owing to the virus.”
The Japanese yen slipped against the U.S. dollar today, as Asian markets recovered. Chinese stocks surged as much as 3% earlier in the day.
The USD/JPY pair last traded at 108.13, up 0.1%.
The AUD/USD pair rose 0.2% to 0.6518. The Reserve Bank of Australia will set its policy on Tuesday.
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