China’s Market News: Yuan Hesitates, Investment Remains Subdued

This daily digest focuses on Yuan rates, major Chinese economic data, market sentiment, new developments in China’s foreign exchange policies, changes in financial market regulations, as well as market news typically available only in Chinese-language sources.

– The offshore USD/CNH retraces within a range despite of a stronger fix set by the PBOC.

– China’s total investment and private investment continued to grow at the slowest pace on record.

– The central government’s business tax income in the first seven months came in at 30 times more than planned.

Yuan Rates

– The PBOC guided the Yuan higher by +182 pips or +0.27% against the U.S. Dollar to 6.6726 on September 13th. We can see from the 1-hour chat that a Doji candle formed following the release of the Yuan fix. This indicates indecision from traders despite of the Central Bank’s guidance. The PBOC appears to want to keep the Dollar/Yuan below the psychological level of 6.70. At the same time, the US Dollar has been extremely volatile since last Friday’s comments from Boston Fed President Rosengren who is also a FOMC voting member. With mixed moves from the two central banks, the USD/CNH is retracing within a range between 6.6832 and 6.6982.

USD/CNH 1-Hour

Created with Marketscope/Trading Station II; prepared by Renee Mu.

Key Economic Data

– Chinese investment in fixed assets shows continued slow growth in August. The national-wide fixed assets investment excluding rural households grew 8.1% in January-August on an annualized basis. In specific, private investment in fixed assets rose 2.1% over the same span of time. Both growth rates remained unchanged from the month prior; however, both have been the lowest rates of all-time.

China’s national statistics bureau reports cumulative growth rates (year-to-date) for fixed assets gauges, such as January-August, rather than individual values for a month, such as August.