7 May 2014
Asia EM Express: PBoC pledges to keep monetary policy prudent
FXStreet (Łódź) - On Tuesday the People's Bank of China released its first quarter monetary policy statement, in which it said that the current prudent stance would be maintained and adjusted if necessary to boost growth and reforms and improve the well-being of the citizens.
The PBoC declared that therefore it would continue using flexibly such monetary policy tools as open market operations (OMO), reserve requirement ratio (RRR), standing lending facility (SLF) and short-term liquidity operations (SLO).
It was also signaled in the report that the central bank's intention was to “exit regular FX intervention in the future, contingent on FX market developments and economic and financial conditions.”
Zhiwei Zhang, Research Analyst at Nomura, believes that the PBoC's reiteration of keeping its monetary policy prudent suggests that the central bank “does not intend to loosen policy significantly.”
“In the report is a box on China's potential growth which includes a subtle message that potential growth is slowing,” the experts points out. “This implies the government would tolerate a slowdown or push reforms to boost growth through productivity gains, rather than easing monetary policy.”
Economic data
China's HSBC Services PMI expansion slowed down to 51.4 in April from 51.9 registered the previous month, Markit Economics said on Wednesday.
Indian HSBC Services PMI, contracting at 47.5 in March, moved up to 48.5 in April.
The Hong Kong Manufacturing PMI deteriorated slightly to 49.7 in April from 49.9 seen in March.
Finally, the Malaysian trade surplus narrowed from 10.4 billion ringgit in February to 9.6 billion ringgit in March, compared with expectations of a 7.4 billion ringgit surplus. Exports grew 8.4%, down from 12.3%, while Imports increased by 0.5%, following a 9.5% rise.
Technicals
The Chinese yuan appreciated for the third straight day on Wednesday, hitting a 3-week high at 6.2245 against the greenback. At the moment of writing the USD/CNY was up by 0.03% at 6.2278.
On Tuesday the pair's daily FXStreet Trend Index was strongly bearish, with the OB/OS Index neutral. RSI was at 49 at the last close, and has climbed to 56 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 182 pips, with ATR (14) expanding at 102 pips. The 1D 200 SMA was at 6.1188, while the 1D 20 EMA was at 6.2353.
The PBoC declared that therefore it would continue using flexibly such monetary policy tools as open market operations (OMO), reserve requirement ratio (RRR), standing lending facility (SLF) and short-term liquidity operations (SLO).
It was also signaled in the report that the central bank's intention was to “exit regular FX intervention in the future, contingent on FX market developments and economic and financial conditions.”
Zhiwei Zhang, Research Analyst at Nomura, believes that the PBoC's reiteration of keeping its monetary policy prudent suggests that the central bank “does not intend to loosen policy significantly.”
“In the report is a box on China's potential growth which includes a subtle message that potential growth is slowing,” the experts points out. “This implies the government would tolerate a slowdown or push reforms to boost growth through productivity gains, rather than easing monetary policy.”
Economic data
China's HSBC Services PMI expansion slowed down to 51.4 in April from 51.9 registered the previous month, Markit Economics said on Wednesday.
Indian HSBC Services PMI, contracting at 47.5 in March, moved up to 48.5 in April.
The Hong Kong Manufacturing PMI deteriorated slightly to 49.7 in April from 49.9 seen in March.
Finally, the Malaysian trade surplus narrowed from 10.4 billion ringgit in February to 9.6 billion ringgit in March, compared with expectations of a 7.4 billion ringgit surplus. Exports grew 8.4%, down from 12.3%, while Imports increased by 0.5%, following a 9.5% rise.
Technicals
The Chinese yuan appreciated for the third straight day on Wednesday, hitting a 3-week high at 6.2245 against the greenback. At the moment of writing the USD/CNY was up by 0.03% at 6.2278.
On Tuesday the pair's daily FXStreet Trend Index was strongly bearish, with the OB/OS Index neutral. RSI was at 49 at the last close, and has climbed to 56 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 182 pips, with ATR (14) expanding at 102 pips. The 1D 200 SMA was at 6.1188, while the 1D 20 EMA was at 6.2353.