Forex - Yuan Rises After PMI Data; Fed Suggests Patient Approach to Rate Hikes
Published Jan 31, 2019 12:22AM ET
Investing.com - The Chinese yuan rose on Thursday in Asia as traders digested business survey data which improved slightly in January but still showed a manufacturing sector in contraction.
The USD/CNY pair fell 0.2% to 6.6971 by 12:22 AM ET (05:22 GMT).
The gain in the yuan came after the National Bureau of Statistics showed on Thursday that China’s January official Purchasing Managers' Index (PMI) rose to 49.5 from 49.4 in December. The number was better than the 49.3 expected by analysts. However, it also suggested activity in China’s manufacturing sector has shrunk for the second straight month.
Meanwhile, the services PMI for January came in at 54.7, better than the 53.8 reported in the previous month.
Traders remained cautious as they await the outcome of the highly-anticipated trade talks between high-level Chinese and U.S. officials that began on Wednesday. The two sides are trying to reach a deal before a March 1 deadline that could usher in higher U.S. tariffs on Chinese goods.
The People's Bank of China (PBOC) set the yuan reference rate at 6.7025 vs the previous day's fix of 6.7343.
Meanwhile, the U.S. dollar index edged down 0.1% to 94.958 on Thursday after falling sharply against its rivals on the previous day as the Federal Reserve left interest rates unchanged and softened language about further rate hikes in its policy statement.
The central bank ditched its preference to continue with "gradual" rate hikes, saying it can hold off on monetary policy tightening following a slowdown in global growth and muted inflation pressures.
"In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes," the Fed said.
Elsewhere, the USD/JPY pair dropped 0.2% to 108.74.
The AUD/USD pair and the NZD/USD pair both gained 0.3%.
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Written By: Investing.com
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