The offshore **yuan** has found stability at approximately **7.09 per dollar** after experiencing a decline to a more than week-long low last week, coinciding with the conclusion of **China's National Day holiday**. The recent **weakness of the yuan** can be attributed mainly to a robust surge in the **US dollar**, propelled by a **stronger-than-expected US jobs rort**. This development has led traders to reassess the probability of a **50 basis point rate cut** by the Federal Reserve in November.
In the wake of last week’s economic data, official rorts indicated a **slight improvement in Stember’s manufacturing activity**, which outperformed expectations following August’s six-month low. However, forecasts were not met in the **services sector**, which recorded its **weakest performance since January 2023**. A private sector survey only added to the caution, revealing the sharpest **contraction in manufacturing** since January and a significant slowdown in services, marking their **lowest level since Stember 2023**.
Market participants are now keenly awaiting China’s upcoming **inflation data** and **trade figures** in the coming days, as they seek to evaluate the health of the world’s second-largest economy.
In a notable market movement, the **USDCNY** fell **0.0315** or **0.44%** to **7.0641** on Monday, October 7, down from **7.0955** in the previous trading session. Analysts forecast that the **Chinese Yuan** is likely to trade at **7.07 by the end of this quarter**, with expectations suggesting a further dreciation to **7.20 within the next 12 months**.