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China PMIs back in expansion, Yuan unmoved

China’s official NBS PMI Manufacturing rose to 52.0 in March, up from 35.7. NBS PMI Non-Manufacturing also rebounded to 52.3, up from 29.6. Both PMIs are back in expansion region. “As of March 25, the resumption rate of large and medium-sized enterprises was 96.6 per cent, an increase of 17.7 per cent from the survey results on February 25,” an NBS statement said. “We cannot say China’s economy has fully returned to normal levels based on a single month. We need to continue observing changes in the following months.”

USD/CNH has little reaction to the release as consolidation continues below 7.1649 temporary top. For now, rise from 6.8452 could still extend higher. But such rise is seen as the second leg of the consolidation pattern from 7.1953. Hence, we’d expect strong resistance from 7.1953 to limit upside to start the third leg. Break of 7.0562 resistance turned support will be the first sign of near term reversal.

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