The Chinese yuan is finding support against a plethora of currency pairs on Monday as the latest data suggested the world’s second-largest economy is continuing to rebound in the aftermath of the coronavirus pandemic. While it is not a key driver of the yuan, the country’s experiment with a digital currency is also being monitored by foreign exchange market observers.
According to the National Bureau of Statistics (NBS), the manufacturing purchasing managers’ index (PMI) reading came in at 51.4 in October, down from the 51.5 in September. It was slightly better than the median estimate of 51.3. This represented the eighth consecutive month of growth in factory activity, buoyed by output, new orders, and export sales. But employment and suppliers’ delivery time fell last month.
Government data of the non-manufacturing PMI rose to 56.2 in October, up from 55.9 in September. This was the fastest growth rate in the services sector since October 13, driven by an improvement in new orders.
The private-sector’s reading of the manufacturing PMI jumped to 53.6 in October, up from 53.0 in September. The Caixin figure was better than the market forecast of 53.
In addition to data, Chinese investors are paying attention to the 2020 presidential election. The latest polls suggest that former Vice President Joe Biden is on a path to victory, but traders are not completely confident after most polling firms failed to accurately predict the 2016 election.
It is unclear which candidate Beijing supports. President Donald Trump has been involved in a trade war, while Biden has not championed a specific China policy, except making vague allusions regarding making the country pay if it violates international law.
Meanwhile, Yi Gang, governor of the People’s Bank of China (PBoC), confirmed that the pilot program to roll out a digital version of the yuan has been so far successful. According to the head of the central bank, there have been four million transactions, worth approximately $2 billion.
The USD/CNY currency pair was flat at 6.6915. The EUR/CNY fell 0.2% to 7.7892, from an opening of 7.7904, at 21:16 GMT on Monday.