FX.co ★ Offshore Yuan Remains Subdued

The offshore yuan remained relatively stable at approximately 7.21 per dollar, oscillating within a narrow band close to two-month lows as investors weighed a series of mixed economic indicators. Retail sales growth for April decelerated and did not meet expectations, highlighting ongoing concerns about waning consumer demand. On the other hand, industrial output surpassed predictions but showed a slowdown compared to March, while the unemployment rate saw a slight decrease, suggesting a minor improvement in labor market steadiness. Additionally, market sentiment turned cautious following China's description of recent trade negotiations with the US as "positive," although specifics about future actions remained vague, with President Trump alluding to a potential call with President Xi. The yuan also garnered support from a weakening US dollar, influenced by an unexpected downgrade in US credit ratings and increasing anticipations of Federal Reserve rate cuts. Investors are now focused on forthcoming decisions by the People's Bank of China regarding key lending rates, including the one-year and five-year loan prime rates.