SHANGHAI: China’s yuan eased against the dollar on Wednesday on persistent doubts about the pace of recovery in the world’s second-biggest economy, while traders also waited on a key US jobs report amid expectations that US rates will stay higher for longer.
A private survey showed an unexpected pickup in Chinese service activity in May, but the onshore yuan slipped slightly after the report.
That was partly due to the official non-manufacturing purchasing managers’ index (PMI) coming in at 51.1, missing the consensus forecast and edging down from the prior month, reflecting that small and medium-sized enterprises outperformed larger firms, UBS analysts wrote in a note.
Taken together with a batch of mixed Chinese data over recent weeks, most analysts are of the view that the economic recovery remains uneven and heightens the uncertainty about the outlook.
The yuan is down 2.1% this year, pressured by its relative low yields versus other currencies and a struggling property market.
Prior to the market’s opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1097 per US dollar, 14 pips weaker than the previous fix 7.1083 but still 1321 pips stronger than Reuters’ estimate.
The spot yuan opened at 7.2399 per dollar and was changing hands at 7.2450 at midday, 48 pips weaker than the previous late session close and 1.90% away from the midpoint.
The US dollar held up strong despite treasury yields falling after the ‘JOLTS’ report showed job openings fell more than expected in April, pushing the number of available jobs per job-seeker to its lowest in nearly three years.
The report has further sharpened focus on Friday’s US nonfarm payrolls data, which is expected to show a pick up in job creation in May from the previous month.
The jobs outcome will be another piece of the puzzle in the Federal Reserve’s policy deliberations as market pricing suggests the first rate cut could come as late as December.
The global dollar index rose to 104.164 from the previous close of 104.11.
The offshore yuan was trading 90 pips weaker than the onshore spot at 7.254 per dollar.
Comments
Comments are closed for this article.