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USD/CNH rebounds from 7.3300 despite a strong Caixin Manufacturing PMI

Daniel Rogers

Nov 01, 2022 18:01

 截屏2022-11-01 上午11.37.49.png

 

After falling to roughly 7.3300 during the Tokyo trading session, the USD/CNH pair demonstrated a V-shaped recovery. Despite the release of positive Caixin Manufacturing PMI data, the asset has made a recovery. The economic data came in at 49.2 against predictions of 49.0 and the prior value of 48.1.

 

China's official Manufacturing PMI dropped to 49.2 from 50.0 and 50.1, as anticipated, according to the National Bureau of Statistics (NBS). In addition, the Non-Manufacturing PMI was significantly lower at 48.7, compared to predictions of 51.9 and the last release of 50.6.

 

In the meanwhile, the US dollar index (DXY) in Tokyo has declined significantly as the risk-on sentiment has grown. The DXY has significantly declined to roughly 111.36. S&P500 futures have rallied strongly since Monday's decline due to confidence surrounding the quarterly results season.

 

Despite an increase in hawkish Federal Reserve (Fed) wagers, US government bond returns have dropped. At the time of writing, the yield on the 10-year US Treasury has declined to 4.04%, a decrease of 0.90% from its prior level.

 

This week's major catalyst will be the Federal Reserve's decision on interest rates. As inflationary pressures show no signs of abating, it is anticipated that the US Federal Reserve will hike interest rates by 75 basis points for the fourth time this year (bps). However, consumer spending declined to 1.4% in the third quarter from 2.0% in the previous quarter, which could weigh on the inflation rate.