USD/CNH rises toward 7.1200 on USD strength – BBH

USD/CNH is up near 7.1200 on US Dollar (USD) strength. China’s October PMI was soggy, BBH FX analysts report.

USD/CNH downtrend remains intact

"The official headline PMI fell 0.6pts to 50.0 (the lowest since December 2022) indicative of stagnant growth. The details showed the manufacturing PMI dropped more than expected to 49.0 (consensus: 49.6) vs. 49.8 due to a holiday-shortened October and a tougher global trade environment. The non-manufacturing PMI matched consensus at 50.1 vs. 50.0 in September."

"The US and China trade truce improves the outlook for China’s manufacturing sector. However, to address China’s domestic imbalance, the country must shift its growth model toward one in which domestic consumption plays a greater role. In our view, a gradual revaluation of China’s currency could help China stimulate consumer spending by boosting disposable income through cheaper imports."

"Bottom line: USD/CNH downtrend is intact."