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Limited Reaction To PMI Data

CNH

No immediate reaction in USD/CNH to PMI figures; manufacturing PMI fell to 50.9 from 51.0, but slightly higher than the 50.8 estimate. Non-manufacturing fell to 53.5 from 55.2, well below estimates of 55.3. Composite PMI slipped to 52.9 from 54.2. USD/CNH last up 19 pips at 6.4678.

  • Markets will watch the PBOC's OMO's again today, the Bank has injected funds for the last four sessions. Liquidity conditions still appear tight heading into quarter end, there was chatter yesterday that state owned banks were unwilling to lend money in the swap markets which exacerbated illiquidity and saw tomorrow-next CNH forward points rise to highs of 48 before dropping back. The contract covers the July 1 public holiday and is last trading at 25, well above the June average of 5.06.

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