Yuan stable as China PMI expands after months of gloom

The Chinese yuan stayed relatively steady as forex markets began December with good news from China’s economy.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) was recorded at 51.8 in November, up from a reading of 51.7 in October. On Friday, the official manufacturing PMI released by the National Bureau of Statistics (NBS) recorded a reading of 50.2, topping the 50 level that suggests expansion for the first time since April. The official non-manufacturing PMI came in at 54.4, the highest level since March.

The US dollar stayed little changed on Monday in Asia following the release of strong economic data in the US the previous week. The US Dollar Index traded marginally higher early in the day, up 0.03% to 98.20 by 8:41 PM ET (01:40 GMT).

US-China trade talks remained in focus after the Global Times, a nationalist English-language tabloid in China with links to the Communist Party of China, tweeted that any phase one trade deal would require that the US roll back tariffs. The next batch of American tariffs on Chinese goods are due to take effect on Dec. 15.

Last week, U.S. President Donald Trump approved two bills that back Hong Kong’s anti-government protestors. The bills are mainly symbolic and have limited practical implications, but China has vowed to take strong measures in retaliation, although it has not yet announced any specific responses.

In mainland China, The People’s Bank of China (PBOC) set the reference rate for the yuan, the midpoint around which the currency is allowed to trade, at 7.0262, slightly weaker than the 7.0247 set on Friday.

The GBP/USD pair was down 0.14% to 1.2915. The pound has taken a number of hits recently as polls continue to suggest that Boris Johnson’s Conservatives are poised to win in elections on December 12, paving the way for a rapid Brexit.

The EUR/USD was up 0.4% to 1.1018.

The USD/JPY pair also gained in morning trading and was up 0.16% to 109.69. Signs continue to point towards more easing from the Bank of Japan.

The AUD/USD pair was up 0.16% to 0.6774 while the NZD/USD pair gained 0.37% to 0.6444.forex.com

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