USD-CNH spikes up on weak PMI figures

China's Caixin manufacturing PMI, an indicator based on a sample of private companies, dropped to 47.0 in September, much lower than market expectation of 47.5. 

Notably, this market-sensitive index has remained below the benchmark level of 50 for seven straight months, and clearly illustrates a downward trend since the beginning of this year. 

"It is seen that China's growth will very likely drop below 7.0% yoy in Q3. USD-CNH breached up 6.43 following a soft print of Caixin PMI. Upside bias is seen in USD-CNH in the near term", says Commerzbank.

China market will be closed from 1-7 October due to National Day holiday, therefore offshore traders could see this is a good opportunity as China's central bank could be less active in the market.

"There will be large amount of USD purchase flows in the coming month, as the overseas tourists during the golden week will likely hit a record high", added Commerzbank.