FX.co ★ Offshore Yuan Dips on Weak PMI Data

The offshore yuan has weakened to approximately 7.23 per dollar after achieving a six-month high in the previous session. Investor sentiment has been dampened by disappointing Purchasing Managers' Index (PMI) data, highlighting the gradual effects of the ongoing trade tensions between China and the United States. A private survey released on Tuesday indicated that China’s services sector experienced its slowest expansion in seven months in April, declining to 50.7 from 51.9 in March. This slowdown is attributed to a decrease in new order growth amid uncertainties stemming from US tariffs. Similarly, the Composite PMI fell to a three-month low of 51.1, although it still represents the 18th consecutive month of private sector growth. Further exacerbating the pressure, recent developments in trade have reignited concerns, particularly after Trump's announcement on Sunday of a 100% tariff on overseas-produced films and plans to implement tariffs on pharmaceuticals in the coming weeks. Additionally, a stronger US dollar has exerted pressure on the yuan, as the Federal Reserve is anticipated to maintain steady interest rates.