Societe Generale notes that better-than-expected PMI data from China suggests leisurely but steady growth, reducing the urgency for the PBoC to ease policy. The bank highlights that the USD/CNY pair fell below its 50-day moving average as the yuan’s strength reflects powerful exports supported by the global artificial intelligence boom. The report also points to a higher trade-weighted CEFTS RMB index and stronger 10-year CGB bond yields.
Yuan strength supported by exports
“China PMI signals slow growth but less urgent PBoC easing: official manufacturing PMI rose more than expected in June to 50.3 from 50.0, while non-manufacturing PMI unexpectedly rose to 50.2 from 50.1.”
“Yuan bulls are firmly in control, with USD/CNY back below 6.7938 (50 dma) following yesterday’s US NFP debacle. RatingDog private sector PMI rose for seventh consecutive month in June.”
“The yuan’s rise in the first half of 2026 reflects strong exports, partly driven by the global artificial intelligence boom. EU trade chief Maros Sefcovic and Chinese Trade Minister Wang Wentao held discussions in Brussels to resolve trade issues. The trade-weighted CEFTS RMB index rose to its highest level since July 2022.”
“Domestic attention will focus on the Politburo meeting later this month. The NDRC has tightened supervision on fundraising, urging banks to avoid underwriting high-yield bonds in yuan and US dollars.”
“The goal is to reduce higher borrowing costs and excessive debt financing, particularly among local government financial instruments. The yield on the 10-year CGB rose 3 bps this week to 1.75%.
(This article was created with the support of an artificial intelligence tool and has been reviewed by an editor.)
