Swiss Franc Gains as China’s PMI, Europe’s Debt

The Swiss franc climbed today as the report showed that China’s PMI fell and Europe’s debt problems continue undermine confidence in the global economic recovery.
According to the report of the Hongkong and Shanghai Banking Corporation, China’s Purchasing Managers’ Index fell from 51.8 April to 51.1 in May, the lowest level in 10 months. A value above 50 indicates expansion of industry. Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, commented on the report:

The Flash manufacturing PMI eased further to 51.1 in May, the lowest level since July 2010. Manufacturers continued to reduce inventories amidst slowing new business flows, leading to slower production growth at a 10-month low. That said, we think that there is no need to worry about a hard landing because the current level of the PMI is still consistent with around 13% IP and 9% GDP growth. Policy focus is still tilted towards taming inflation. We expect Beijing’s tightening policy will continue in the coming months.

Europe still has its negative influence on market sentiment. Greece takes measures to reduce its economic problems, trying to convince other countries of the European Union that the country deserves another aid, but many traders simply don’t believe that it’ll bring any meaningful result and prefer to seek safer assets.
USD/CHF retreated to 0.8794 from 0.8799 today as of 4:23 GMT. EUR/CHF slumped to 1.2351 from 1.2412. CHF/JPY rose to 93.17 from 93.09.

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