MNI China Daily Summary: Wednesday, July 31

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MNI: PBOC Net Injects CNY185.57 Bln via OMO Wednesday

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MNI BRIEF: China July PMI Contracts For Third Straight Month

Flash Inflation In-Line With Tracking; Services Softens But Only Slightly

MNI: EUROZONE JUL FLASH HICP +2.6% Y/Y

MNI: GERMANY JUL UE RATE (SA) 6.0% (FCST 5.9%); JUN 6.0%

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Yuan Strengthens Despite Fix

CNH

The PBOC fixed USD/CNY at 6.4823 around 59 pips higher than yesterday. The PBOC has weakened the yuan 115 pips so far this week.

  • Despite the fix, the yuan has strengthened in Asia on Tuesday, USD/CNH last down 84 pips at 6.4710, just above session lows of 5.4656. 1 month CNH implied volatility has risen to 5.375%, the first gain in 4 days.
  • Inflation data yesterday was robust, CPI increased 0.2% in December Y/Y, reversing a 0.5% decline in November. Analysts have noted that the print was supported by the worst cold spell in decades which drove food prices higher. This effect is not expected to last; as weather conditions improve going forward the effects are expected to fade. However, the pace of decline in PPI moderated, which could signal some upward price pressures on the horizon.
  • Chinese equity markets are lower today as risk sentiment takes a hit after losses yesterday following executive orders by US President Trump that bans purchases of designated Chinese stocks.
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