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1 Apr 2014
Asia EM Express: RBI on hold in April, China manufacturing PMI little changed
FXStreet (Łódź) - The Reserve Bank of India (RBI) held its monetary policy meeting on Tuesday and decided to keep the repurchase rate on hold at 8.00%, as widely expected. The central bank's wait-and-see stance was supported by the recent sharp drop in annual inflation from 11% in November last year to 8% in February, considerably below RBI's projections.
As far as the central bank's economic forecasts are concerned, real GDP growth is expected to accelerate in 2015 to 5.5% from “a little below” 5% in 2014. The inflation estimate for the first quarter of 2015 was maintained at 7.5-8.5%, with upside risks highlighted
Sonal Varma and Aman Mohunta, research analysts from Nomura point out that “the RBIs forward guidance says 'inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture' but at the same time it highlighted several upside risk to the 8% headline CPI inflation target by January 2015 and also indicated that it will look through the base effect-led fall in headline CPI inflation.”
“In our view, this suggests that, while the RBI may remain on hold in the near term, it remains cognizant of the potential upside risks to inflation.”
Economic data
Chinese Manufacturing PMI, released by the China Logistics Information Center on Tuesday, came in at 50.3 in March, slightly up from 50.2 registered the previous month and in line with forecasts. The HSBC Manufacturing PMI on the other hand showed a contraction accelerating from 49.1 to 48.0, against forecasts of remaining unchanged.
Tim Condon comments on the difference between the official and the HSBC PMI readings: “The HSBC/Markit PMI includes more SMEs and private firms that are more exposed to indirect policy tightening and unlikely to benefit from targeted stimulus measures.”
“The official manufacturing PMI tracked the slowdown in sequential industrial production growth that started in the fourth quarter of 2013 and continued into 2014. Based on the March print sequential growth has bottomed out but remains weaker than in the fourth quarter.”
On Tuesday HSBC also released Manufacturing PMI readings for South Korea which saw a rise to 50.4 from 49.8 and for Indonesia, which recorded a drop to 50.1 from 50.5.
Inflation data for these two countries was reported as well. On Monday South Korea's National Statistical Office informed that month-on-month CPI growth slowed down slightly from 0.3% in February to 0.2% in March, while year-on-year it accelerated to 1.3% from 1%.
Statistics Indonesia's data showed a drop in inflation to 0.08% from 0.26% on a monthly basis and from 7.75% to 7.32 on an annual basis.
Thai CPI data, released by the Thai Ministry of Commerce on Tuesday showed a pick up the annual inflation rate to 2.11% in March from 1.96% in February.
Technicals
The Chinese yuan strengthened against the dollar on Tuesday to 6.2044, as the PboC fixed its mid-point 0.03% higher at 6.1503.
The daily USD/CNY FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was neutral at 72.1306 at the last close. Daily 2-StDev Volatility Bandwidth was expanding at 367 pips, with ATR (14) shrinking at 151 pips. The 1D 200 SMA was at 6.1073, while the 1D 20 EMA was at 6.1791 .
The Indian rupee rose 0.46% against the dollar to 11300.00 at the Monday close.
The daily USD/INR FXStreet Trend Index was slightly bullish, and the OB/OS Index neutral. RSI was at 35.5862 at the last close. The 1D 200 SMA was at 11,345.54, while the 1D 20 EMA was at 11,467.09.
As far as the central bank's economic forecasts are concerned, real GDP growth is expected to accelerate in 2015 to 5.5% from “a little below” 5% in 2014. The inflation estimate for the first quarter of 2015 was maintained at 7.5-8.5%, with upside risks highlighted
Sonal Varma and Aman Mohunta, research analysts from Nomura point out that “the RBIs forward guidance says 'inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture' but at the same time it highlighted several upside risk to the 8% headline CPI inflation target by January 2015 and also indicated that it will look through the base effect-led fall in headline CPI inflation.”
“In our view, this suggests that, while the RBI may remain on hold in the near term, it remains cognizant of the potential upside risks to inflation.”
Economic data
Chinese Manufacturing PMI, released by the China Logistics Information Center on Tuesday, came in at 50.3 in March, slightly up from 50.2 registered the previous month and in line with forecasts. The HSBC Manufacturing PMI on the other hand showed a contraction accelerating from 49.1 to 48.0, against forecasts of remaining unchanged.
Tim Condon comments on the difference between the official and the HSBC PMI readings: “The HSBC/Markit PMI includes more SMEs and private firms that are more exposed to indirect policy tightening and unlikely to benefit from targeted stimulus measures.”
“The official manufacturing PMI tracked the slowdown in sequential industrial production growth that started in the fourth quarter of 2013 and continued into 2014. Based on the March print sequential growth has bottomed out but remains weaker than in the fourth quarter.”
On Tuesday HSBC also released Manufacturing PMI readings for South Korea which saw a rise to 50.4 from 49.8 and for Indonesia, which recorded a drop to 50.1 from 50.5.
Inflation data for these two countries was reported as well. On Monday South Korea's National Statistical Office informed that month-on-month CPI growth slowed down slightly from 0.3% in February to 0.2% in March, while year-on-year it accelerated to 1.3% from 1%.
Statistics Indonesia's data showed a drop in inflation to 0.08% from 0.26% on a monthly basis and from 7.75% to 7.32 on an annual basis.
Thai CPI data, released by the Thai Ministry of Commerce on Tuesday showed a pick up the annual inflation rate to 2.11% in March from 1.96% in February.
Technicals
The Chinese yuan strengthened against the dollar on Tuesday to 6.2044, as the PboC fixed its mid-point 0.03% higher at 6.1503.
The daily USD/CNY FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was neutral at 72.1306 at the last close. Daily 2-StDev Volatility Bandwidth was expanding at 367 pips, with ATR (14) shrinking at 151 pips. The 1D 200 SMA was at 6.1073, while the 1D 20 EMA was at 6.1791 .
The Indian rupee rose 0.46% against the dollar to 11300.00 at the Monday close.
The daily USD/INR FXStreet Trend Index was slightly bullish, and the OB/OS Index neutral. RSI was at 35.5862 at the last close. The 1D 200 SMA was at 11,345.54, while the 1D 20 EMA was at 11,467.09.