Yuan Weakens After PMI

Offshore yuan is weaker, giving back after two days of gains. USD/CNH last up 43 pips at 6.5689, it reversed course after a miss in Caixin PMI data, jumping from session lows of 6.5583.

• Caixin China PMI Manufacturing fell to 50.6 in March from 50.9, below estimates of 51.4. The figure denotes an 11-month low point, the findings contrast with those in an official survey which showed manufacturing activity grew at a stronger pace as large firms ramped up production after a brief lull during the Lunar New Year holidays. The Caixin survey focuses on small, private and export-oriented firms while the official survey typically polls large and state-owned manufacturers. Among the subcomponents input costs hit the highest in 40 months, "We should pay attention to inflation in future as the gauges for input and output prices have been rising for several months," said Wang Zhe, Senior Economist at Caixin Insight Group, "the growing inflationary pressure limits the room for future policies and is not a good thing for sustaining an economic recovery in the post-epidemic period."
• Meanwhile, geopolitical tensions continue to simmer, the Biden administration yesterday raised concerns over policy tools China uses to encourage economic growth.
• China is said to be considering forming a new stock exchange to attract overseas-listed firms from markets like Hong Kong and the US, Reuters reports. China's State Council has reportedly asked the CSRC to ascertain how an index would be structured to lure mainland companies listed offshore.