China’s official manufacturing PMI index likely to have dropped in October – DBS Bank

China’s official manufacturing PMI index is likely to have dropped a bit in October. According to a DBS Bank research report, the PMI index is expected to have come in at 52 from September’s 52.4. The easing in the index shows the ‘tug-of-war between resilient domestic demand and regulators’ drive to rein in financial risks’.

In the month of September, short-term corporate loans contracted by RMB 52 billion. This was the first decline since October 2016. Entrusted loans also saw a drop of 47 percent on a year-on-year basis. Tightening credit, along with rising borrowing costs, are expected to continue to be a drag on activities. Moreover, the anti-pollution campaign is adding to the pressure. The campaign might lead to an additional disruption in production apart from the impact caused by the environment curbs implemented in August.

“Fears of winter shortages will keep commodity prices at high levels. Elevated PPI in turn lowers real interest rates and boosts industrial profits”, stated DBS Bank.

At 14:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was slightly bearish at -65.1465, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 12.4777. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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