CNY: Waiting for the PMIs - Commerzbank

Next week, China will release its official PMIs, which, unlike in other countries, are always released on the last day of the month rather than the first day of the following month. This will be the first major data release since 'Liberation Day', when US tariffs on imports from China were increased by a total of 125 percentage points across a wide range of products. There are already anecdotal reports of factory closures and sharply reduced working hours. However, high-frequency data from China in particular paint a different picture (thus far), Commerzbank's FX analyst Volkmar Baur notes.

CNY holds firm amid trade tensions

"Steel production, for example, remains very robust. In the first 20 days of April, steel production was around 10% higher than in the same period last year. Car sales are also currently on track for high single-digit growth in April. According to the National Statistics Institute, there has also been no significant decline in shipping traffic."

"The situation is different in the housing market, where daily sales data once again point to a significant slowdown in momentum and thus to no end to the crisis. However, it must also be said that the housing market has been in crisis for years and that this development is unlikely to have much to do with the tariffs."

"Alternative sentiment indicators point to a slowdown, but not a collapse. A similar picture can be expected from the official PMIs. The CNY should be less affected. The exchange rate against the US dollar has been fairly stable for several days. And this is likely to remain the case as long as there is no further positive movement on the political front regarding the tariff situation. In that case, USD/CNY could fall slightly."