FX.co ★ Offshore Yuan Firms as Stimulus Bets Grow

The offshore yuan appreciated to approximately 7.16 per dollar on Monday, recovering from the previous week's downturn, as the latest Purchasing Managers' Index (PMI) data fueled expectations for further stimulus initiatives. Official reports indicated a slight rise in China's manufacturing PMI to 49.7 in June, up from 49.5, yet it remained in contraction for the third consecutive month. Similarly, the non-manufacturing PMI inched up to 50.5, reflecting modest growth in the services and construction sectors. These figures highlight the slow and inconsistent pace of China's economic recovery, strengthening anticipations of additional stimulus measures from Beijing. This perspective is in line with Premier Li Qiang's recent remarks at a significant economic forum, where he stressed the importance of stimulating domestic demand in the face of ongoing deflationary pressures. A weaker US dollar further supported the yuan amid predictions of Federal Reserve policy easing. Concurrently, the resumption of trade discussions with Washington has generated cautious optimism, though key uncertainties persist. Market participants now look forward to Tuesday's Caixin PMI data for additional insights into private-sector growth dynamics.