China’s currency hit its highest level in more than a year, as retail sales increased for the first time in 2020, underscoring the country’s economic recovery from the epidemic.
The renminbi strengthened by 0.4 percent to Rmb6.7857 per US dollar in mainland China on Tuesday, reaching its strongest level since May 2019. According to official figures, retail sales grew by 0.5 percent in August compared to a year earlier. first.
The less tightly controlled offshore renminbi, which trades in major centers outside China, strengthened 0.3 percent from the previous Rmb6.8 per dollar.
Ken Cheung, a strategist at Mizuo Bank, said the renminbi was also boosted by hopes of better relations between Beijing and Washington over the future agreement of popular Chinese app Tickcock.
Cheung said of the improvement in retail sales, “due to concerns about Sino-US tensions, investors shifted their focus to stronger China fundamentals.” Onshore renminbi could go up to Rmb6.75 per dollar, he said.
Meanwhile, China’s central bank has “shown some signs of resistance to a strong renminbi, paving the way for currency appreciation”, JPMorgan analysts wrote in a note. He added that the circumstances were “conducive to less official resistance to foreign exchange strength, especially in the absence of clear signs of renminbi overvaluation”.
Excited Chinese economic data also boosted the country’s shares. The CSI 300 index of Shanghai and Shenzhen-listed shares was up 0.6 percent, outpacing the initial losses. Hong Kong’s Hang Seng Index gained 0.5 percent.
“The strengthening of the labor market and revival in consumer confidence suggest that services activity has improved,” said Capital Economics senior China economist Julian Evans-Pritchard. He said the Chinese economy was “on track to return to its pre-virus growth rate before the end of the year.”
Elsewhere in the Asia-Pacific region, Japan’s Topix index fell 0.6 percent and Australia’s S&P / ASX 200 slipped 0.1 percent.
In Europe, markets were subdued on Tuesday morning, as UK labor market figures show that some 700,000 jobs have moved since the onset of the coronovirus lockdown, and the growing transition in the region.
Sterling rose 0.1 percent to $ 1.2855 while the UK’s FTSE 100, German Dax and European Stocks 600 were roughly flat.
Although Britain’s unemployment rate reached 4.1 per cent in the three months of July, Pantheon Macroeconomics head UK economist Samuel Tombs said he expected payroll numbers to “fall further in September” as winds of support for the government , And winter unemployment is 8 percent at the peak.
The futures market pointed to a slight gain for US stocks when Wall Street opens later in the day, with the S&P 500 rising 0.3 percent. On Monday, the Wall Street benchmark rose 1.3 percent, while the tech-heavy Nasdaq added 2 percent.
The dollar, measured against a basket of its trading peers, slipped 0.1 percent on Tuesday.
Investors are awaiting important decisions this week by central banks including the US Federal Reserve, Bank of Japan and Bank of England.