On Thursday the China Statistic Institution published the PMI manufacture Caixin Data. It can be seen that it declined from 52.0 to become 51.3 in June. That number is under the expectation.
However, the China’s manufacture is still maintaining its expansion for 14 consequences month. That slowdown in manufacturing sector expansion was largely triggered by a decline in output at 51.0.
That was the lowest position since March 2020. The brand new sub index orders also fell to a low level for three months. Meanwhile, the new export for the sub index order is barely grew.
It is especially after posting a significant spike in the previous period. The increasing coronavirus cases still makes an impact for this sector in China.
The Demand is Decreasing
China Manufacturing PMI data that is quite disappointing this morning is actually inseparable from the increasing cases of corona virus, especially the delta variant that is more contagious.
This resulted in the decreasing demands from countries in the Asian region which contributed more than 50 percent to China's total exports. The data shows that increasing case.
Based on a report, for about 150 new cases are noted in the province called Guangdong,. That place is the export and manufacturing area which is located in the south part.
This prompted the governments there to create some prevention efforts resulting in a slowdown in processing capacity at the port. That thing for sure affecting the progress there.
Dollar Strengthens Versus Yuan
Aside from the the technical problems caused by the rise in COVID-19 cases, Wang Zhe as the senior economist said that he remained optimistic about China's manufacturing sector in the coming months.
However, Zhe also noted that during the second quarter of this year marks the effect will weaken. The slowing down economy treat and pressure on inflarion create the serious challenges.
Elsewhere, the US dollar is strengthening, especially against the Yuan. A fairly disappointing manufacturing index this morning made the Yuan currency weakened limited.
As news spread in the Asian session, USD/CNY was trading at 6.46. It means that the pair was up 0.11 percent from the daily Open level. Some other pairs are also moving their position.
The BOE Government Stated the Dovish Speech
The pound slumped nearly 0.3 percent to a range of 1.3795 against the U.S. dollar midway through Thursday's European session (July 1). There is a thing that triggers the situation like that.
It is especially after the British Central Bank (BoE) Governor Andrew Bailey delivered a dovish speech. Sterling is also weakening versus the Euro. It is hindered from the further rebound effort to the Yen.
Andrew Bailey said that the policymakers should not overreact to a "temporary" spike in inflation. He argues that part of the recent spike in inflation stems from the basic effect.
It have arisen along with the loosening of the Corona virus lockdown rules, and those effects will not last long. It is important for not overreacting to the strong inflation and growth.
The Prediction for the Central Bank Decision
Bailey's opinion dampened the speculation which the BoE was likely to raise rates sooner. That speculation had been circulating in some circles before and believed by some people.
He also dismissed concerns about inflation expressed by one of his co-workers, Andy Haldane. On Wednesday, Haldane said that he expected inflation to rise to 4 percent by the end of the year.
Bailey, meanwhile, confirmed that the central bank's forecast for inflation remains at 3 percent, then declines to the BoE's target (2 percent) next year.
In addition, Bailey reckons that although the UK economy is rebounding very quickly at the moment. That is why; the growth in 2022 will be slower.
