Stronger CNY despite weaker data – Commerzbank
The post Stronger CNY despite weaker data Commerzbank appeared com. The People’s Bank of China set its USD/CNY fix at 7. 0825 this morning, signalling for the seventh straight week that it prefers a stronger CNY. Since the end of September, USD/CNY has fallen by a total of 0. 5% (stronger CNY). At first glance, this may not seem like much. However, it should also be noted that the trade-weighted US Dollar (USD) also gained around 1% over the same period. In other words, the CNY also appreciated against other trading partners during this period, and even slightly more so, Commerzbank’s FX analyst Volkmar Baur notes. PBoC supports firmer JPY as economy softens “At first glance, this is particularly surprising because it is happening during a period of economic weakness. After the September figures already looked less than robust last month, the data released this morning pointed not only to continued weakness, but also to a worsening of the situation. Industrial production did rise by 4. 9% year-on-year in October. However, this not only fell well short of the consensus expectations according to Bloomberg (5. 5%), but was also significantly below the previous month’s figure (6. 5%). All other data were no better and in some cases significantly weaker. While retail sales remained in positive territory at 2. 9%, the crisis in the property market continues and appears to be intensifying again.” “Property sales fell by around 20% year-on-year in October, with construction starts down by almost 30%. What is particularly striking, however, is that the weakness in investment is no longer limited to the property sector. Fixed asset investment, which had risen by over 4% in the first quarter of this year, has recently fallen significantly. The Chinese statistics office only publishes aggregate figures for the entire 10 months of this year. However, it can be estimated from these figures that investment in October alone.
