Data released over the weekend showed that China's official factory PMI slipped for a sixth consecutive month to a 3 year low of 49.4 in January, compared with a median expectation of 49.6. While the private Caixin survey improved slightly, rising to 48.4 from 48.2 in December, remaining in contractionary territory since early last year.

The weakness of China's official manufacturing PMI has hit commodity prices and the currencies of commodity producers. Oil prices have retreated from last week's better levels. Would the weakness of the Chinese data prompt for further stimulus from the PBoC? 

The fall in services PMI is a cause of concern for the policy makers as China attempts to move towards consumer led growth model. Weak data may exacerbate speculation that the value of the CNY is primed to drop, something that the Chinese authorities have been attempting to bring under control.

The weak fundamentals will build up the easing pressure on policy makers who are concerned about the impact of outflow of capital reserves on the yuan. Bloomberg data showed that China's capital outflow jumped in December with the estimated 2015 total reaching USD1 trln.