USD/CNY Logs Modest Gains After China’s Services PMI Disappoints

The USD/CNY currency pair rose modestly today following a worse-than-expected report on China’s services sector. While the industry continued to expand, the rate of expansion slowed much more than economists were expecting.
The headline seasonally adjusted China Services Purchasing Managers’ Index dipped from 56.3 in December to 52.0 in January. Analysts had predicted just a moderate decrease to 55.5. The reading above 50.0 means that the sector continues to grow but at a much slower pace. The report commented on the result:

China’s service sector expanded at a softer rate at the start of 2021, with companies signalling the weakest increase in business activity for nine months. Concurrently, the total amount of new work rose at the softest rate since last August, partly due to a slower increase in export sales, amid reports that customer demand was dampened by the ongoing coronavirus disease 2019 (COVID-19) pandemic.

The disappointing report on the services industry followed the similar disappointment from the manufacturing report released on Monday. The data suggests that China’s economic recovery is losing momentum, though it is still far stronger than in the majority of other countries around the world.
There are no macro releases scheduled for the rest of the week in China. Next week, China will release reports on the trade balance, the Consumer Price Index, and the Producer Price Index.
USD/CNY edged up from 6.4561 to 6.4608 as of 7:04 GMT today.
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Original from: www.earnforex.com