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On April 3, Kimberly Clausing, a former Biden administration official and nonresident senior fellow at the Peterson Institute for International Economics, called Trumps tariff announcement on Wednesday "very stubborn and much worse than I expected." "I expected things to be bad, but I didnt expect this level of self-harm. Its shocking that anyone thought this was a good idea. Id be shocked if we can get through this without a recession and Trump doesnt have to reverse his policies."On April 3, some economists worry that if Trump does not quickly cancel the latest round of tariffs, it may push the US economy into a recession. "If the US government implements these higher tariffs without major exemptions, it will be difficult for the economy to digest this. A recession seems more likely." said Mark Zandi, chief economist at Moodys Analytics. Zandi said, "In many ways, the tariffs announced by Trump are even worse than the worst case scenario he envisioned. If they stick to it, I will buckle up and prepare for the impact." Zandi added that on a static basis, tariffs account for nearly 2% of GDP (not considering the impact of tariffs on the economy and taxes), which makes this round of tariffs the largest tax increase since the tax increase used to finance the war during World War II.German Automobile Industry Association VDA: The EU must now speed up and make up its mind on the issue of free trade agreement.On April 3, the Reserve Bank of Australias latest report for the banking industry warned that continued uncertainty in US trade policy "could have a chilling effect on business investment and household spending decisions, and pose a significant headwind to the outlook for global economic activity and inflation." The Reserve Bank of Australia said there was also considerable uncertainty about the impact of possible changes in fiscal, regulatory and other government policies on global growth and inflation.The Hang Seng Index in Hong Kong opened on April 3 (Thursday) down 564.32 points, or 2.43%, to 22,638.21 points; the Hang Seng Technology Index opened on April 3 (Thursday) down 168.53 points, or 3.11%, to 5,257.91 points; the CSI 300 Index opened on April 3 (Thursday) down 219.05 points, or 2.57%, to 8,312.46 points; the H-share Index opened on April 3 (Thursday) down 61.24 points, or 1.59%, to 3,800.76 points.

As China's official PMI rises, the USD/CNH exchange rate fluctuates below 6.7600

Daniel Rogers

Jan 31, 2023 16:38

The USD/CNH currency pair is experiencing unpredictable volatility as a result of the National Bureau of Statistics (NBS) of China releasing strong official PMI data. The Official Manufacturing PMI has hit 50.1, exceeding both the 49.7 consensus expectation and the 49.0 level from the prior month. In addition, the Non-Manufacturing PMI has grown from 51.0 to 54.4. Despite the fact that households were preoccupied with celebrating the Lunar New Year in January, the scale of economic operations in China increased considerably.

 

The Caixin Manufacturing PMI data, which will be issued on Wednesday, will be the catalyst for a ferocious move in the Chinese Yuan. The economic indicators may rise to 49.5, up from 49.0 earlier.

 

As a result of the elimination of restrictions on the movement of people, products, and machines, China's economy is operating at full capacity. According to a Reuters poll, China's economic growth is anticipated to return to 4.9% in 2023 before stabilizing in 2024, as policymakers pledge to bolster support for the COVID-ravaged economy. In addition, the People's Bank of China will cut the Loan Prime Rate (LPR) by 5 basis points (bps) in the first quarter of CY2023, according to the survey.

 

In the interim, the risk-off impulse is regaining traction as S&P500 futures have surrendered more than half of the gains made by Asia's early trading session. As the Federal Reserve (Fed) prepares to raise interest rates to achieve its inflation objective of 2%, risk-perceived assets are anticipated to remain volatile. Fed chair Jerome Powell is likely to announce a 25 basis point (bps) interest rate hike due to the sharp declines in consumer spending and the Producer Price Index (PPI) in the United States economy.