Article by ForexTime
China was in focus on Tuesday, with the release of two closely-watched surveys on manufacturing activity and also following the International Monetary Fund’s decision to finally include the yuan in its elite basket of reserve currencies.
The data were rather gloomy though as China’s manufacturing sector weakened in November and remained in contractionary territory, according to the official survey. Meanwhile, a private survey from Caixin-Markit climbed marginally last month, but also pointed to a sector in contraction.
China’s services sector was a brighter spot, with the non-manufacturing PMI rising 0.3 points to 53.6 in November from the previous month.
The renminbi was also in focus after the IMF said China’s currency would occupy a 10.92 per cent weighting with the special drawing rights basket effective October 1 next year. The People’s Bank of China this morning set the reference rate around which the so-called “onshore” renminbi trades weaker by 0.02 per cent to Rmb6.3973 per dollar.
By lunchtime the Shanghai Composite was down 0.5 per cent and the Shenzhen Composite was down 0.4 per cent.
Nevertheless, some bourses across Asia Pacific eked out some gains. Hong Kong’s Hang Seng was up 1.7 per cent, Australia’s S&P/ASX 200 was up 1.9 per cent and Japan’s Nikkei 225 was up 1 per cent.
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Another important event in the Asian session was in Australia. The Reserve Bank of Australia has left interest rates at a record low 2 per cent but remains upbeat about the prospects for the domestic economy.
Most economists were expecting the bank to hold rates. The RBA has already cut rates twice this year, in February and May, to stimulate the economy and in its preceding decision on monetary policy on November 3 the central bank flagged that further rate cuts are possible in the coming months. However, it tempered this by saying the outlook wasn’t so bad, despite the impending fall in mining investment. This helped support the Australian dollar, which gained 0.7 per cent at $0.7274 after today’s decision.
Article by ForexTime
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