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Growth Concerns Knock CNH

CNH

USD/CNH surged back above 6.7000 post the Asia-close, touching as high as 6.7200. We open this morning around 6.7100. Comments from China Premier Li Keqiang around economic difficulties in 2022 weighed.

  • The Premier's comments came at an emergency meeting with local governments and SoEs. Of particular concern to the Premier and what needs to be addressed is the rising unemployment rate. The surveyed jobless rate rose to 6.1% in April, the highest level observed since early 2020.
  • Comments that the economic situation in China in 2022 is more difficult, in some respects to 2020, were also notable. Full year 2020 GDP growth was 2.2%. Official targets for 2022 are still well above this level, as are consensus forecasts, although the consensus outlook is clearly trending lower. The latest Bloomberg survey has full year growth for 2022 at 4.5%, with growth seen flat in Q2.
  • Market speculation around fresh easing measures is likely to stay elevated. To recap, this week has seen modest additional fiscal stimulus, fresh encouragement for local governments to boost infrastructure investment and banks to boost loan quotas to SMEs.
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USD/CNH surged back above 6.7000 post the Asia-close, touching as high as 6.7200. We open this morning around 6.7100. Comments from China Premier Li Keqiang around economic difficulties in 2022 weighed.

  • The Premier's comments came at an emergency meeting with local governments and SoEs. Of particular concern to the Premier and what needs to be addressed is the rising unemployment rate. The surveyed jobless rate rose to 6.1% in April, the highest level observed since early 2020.
  • Comments that the economic situation in China in 2022 is more difficult, in some respects to 2020, were also notable. Full year 2020 GDP growth was 2.2%. Official targets for 2022 are still well above this level, as are consensus forecasts, although the consensus outlook is clearly trending lower. The latest Bloomberg survey has full year growth for 2022 at 4.5%, with growth seen flat in Q2.
  • Market speculation around fresh easing measures is likely to stay elevated. To recap, this week has seen modest additional fiscal stimulus, fresh encouragement for local governments to boost infrastructure investment and banks to boost loan quotas to SMEs.