Offshore Yuan Recoups Earlier Losses

China June Caixin services PMI prints 50.3 in June from 55.1 in May, the figure denotes the lowest since April 2020. Composite PMI dragged down to 50.6 from 53.8. Offshore yuan now slightly stronger on the day, recouping earlier losses. USD/CNH last down 25 pips at 6.4962.

• Commenting on the China General Composite PMI data, Dr. Wang Zhe, Senior Economist at Caixin Insight Group said: "Both the gauges of output and new orders were still in expansionary territory in June, but fell to the lowest in 14 months. Employment in the manufacturing sector was strong, while that in the services sector was weak. The labor market was stable overall. The gauges for input prices and output prices largely fell, indicating easing inflationary pressure. "Overall, activity in both the manufacturing and services sector continued to expand. However, impacted by the resurgence of the virus in some regions in China, the services sector was weaker than the manufacturing sector, both in terms of market supply and demand or employment. The manufacturing industry has returned to normal in the wake of the epidemic, while the services industry is still sensitive to regional resurgences. In addition, the low base effect from last year will continue to weaken in the second half of this year. Inflationary pressure, intertwined with the economic slowdown, will still be a serious challenge."