China’s currency weakened to its lowest level in more than a decade on Thursday, while stock markets were steady with the health of global manufacturing in focus.
China’s onshore exchange rate fell to fresh 11-year lows, dropping 0.2 per cent to Rmb7.0749 against the dollar.
The currency, which trades in a band set by the Chinese state, has been in focus thanks to rising trade tensions and US accusations of currency manipulation. The renminbi has largely stayed weaker than the Rmb7 per US dollar level since it crossed that threshold earlier this month, igniting a wave of jitters across global markets.
European stocks fell at the open, with the composite Stoxx Europe 600 down 0.3 per cent. Hong Kong’s Hang Seng was the main mover in Asian equities trading, as it slipped 0.9 per cent as financials and property stocks fell.
A series of closely watched manufacturing surveys were in focus on Thursday, “which will give us a fresh opportunity to test the global growth pulse,” Deutsche Bank strategists said.
First out the blocks in Europe was France, where PMIs slightly beat expectations. “This data of course will be the single biggest growth data point ahead of the ECB meeting in 3 weeks’ time,” Deutsche Bank added.
Separately, preliminary figures released on Thursday showed the Japanese manufacturing sector shrank for a fourth-consecutive month in August.
Those moves came after the S&P 500 closed 0.8 per cent higher following the release of minutes from the Fed’s meeting in late July. The summary showed policy committee members were split, with most officials seeing the 25 basis point reduction as a “recalibration” while others had sought a larger 50bp cut.
“Most in the committee share chairman [Jay] Powell’s delusion that the Fed is making mid-cycle adjustments to monetary policy,” Rabobank strategists said.
“There is now a strong feedback loop between trade policy and monetary policy that will force the FOMC to make more insurance cuts in the coming months, probably as early as September and October.”
The apparent split seen in the Fed’s minutes mean investors will be searching for further clues from Mr Powell’s speech at the gathering of world central bankers in Jackson Hole, Wyoming, on Friday.
- German flash manufacturing PMI
- Eurozone flash manufacturing PMI