Chinese Yuan Flat amid Strong Economic Data, PBoC Action

The Chinese yuan is posting modest gains against its US counterpart to start the trading week, with strong economic data and additional monetary policy actions in focus. Following last year’s monumental 7% ascent and its modest performance in early 2021, the yuan has cooled down, trading relatively flat in recent weeks. Will the yuan rest 6.49 against the greenback?

According to the National Bureau of Statistics (NBS), industrial production soared 35.1% year-over-year in the first two months of the year, beating the median estimate of 30%. China’s industrial activity was broad-based, with many sectors recording noteworthy growth, including chemicals, textiles, transportation equipment, machinery, and metals.
Retail sales also surged in the January-February period, climbing 33.8%, higher than the market forecast of 32%. The nation’s retail trade reported better-than-expected gains in apparel, cosmetics, office supplies, automobiles, and oil products.
The unemployment rate continued to struggle, rising from 5.2% in December to 5.5% in the first two months of the calendar year. But it is the country’s youth that is struggling the most as the 16-to-24 demographic suffers a 13.1% jobless rate.
In 2021, more than nine million students are projected to join the workforce, up from 2020’s record of 8.74 million. While the central government plans to create 11 million new jobs, young professionals in the world’s second-largest economy face incredible competition.
Housing prices rose at an annualized rate of 4.3% in February, up from 3.9% in January.
Fixed asset investment spiked 35.% year-over-year, falling short of economists’ expectations of 40%. Public investment increased 32.9%, while private investment jumped 36.4%. A wide range of industries received additional investment, including education, utilities, sports, entertainment, and transportation.
Foreign direct investment into China climbed again, recording 31.5% growth to $26.07 billion in January-February.
The Chinese economy continues to rebound, but market analysts fear that the recovery may be uneven, something that NBS officials acknowledged.

In the first two months, the economy kept the momentum of recovery and positive factors continued to accumulate.

However, we must be aware that the Covid-19 pandemic is still rampaging globally and the world economy is facing severe challenges. Domestically, the unbalanced recovery is still notable and the foundation for the economic recovery is not solid yet.

Premier Li Keqiang has stated that the authorities have established a gross domestic product (GDP) growth target of “above 6%” for 2021
On the monetary policy front, the People’s Bank of China (PBoC) injected the financial system with $15.37 billion worth of one-year medium-term lending facility (MLF) loans. This allowed interest rates to remain unchanged at 2.95% for the 11th consecutive month. Because the same amount of reverse repurchasing agreements maturing on Monday, there was no net basis.
The USD/CNY currency pair tumbled 0.08% to 6.5033, from an opening of 6.5085, at 12:10 GMT on Monday. The EUR/CNY dropped 0.3% to 7.7562, from an opening of 7.7806.
If you have any questions, comments, or opinions regarding the Chinese Yuan, feel free to post them using the commentary form below.

Original from: www.earnforex.com