FX.co ★ Offshore Yuan Retreats on Mixed PMI Data

The offshore yuan weakened to 6.76 per dollar on Wednesday, pulling back from a more than three-year high hit in the previous session, as investors digested mixed PMI data underscoring the fragility of China's economic recovery. A private survey showed China's composite PMI rising to a three-month high of 54 in May, with the services PMI also climbing to a three-month peak of 54.4. In contrast, manufacturing momentum eased, with the PMI slipping to 51.8 from April’s five-year high of 52.2. Earlier in the week, official data painted a more subdued picture, with the composite PMI edging up to 50.5 from 50.1, supported by a modest improvement in non-manufacturing activity (50.1 vs. 49.4), while the manufacturing PMI fell to the 50 threshold that separates expansion from contraction, down from 50.3. Meanwhile, risk appetite remained muted amid renewed tensions in the Middle East after Iran fired ballistic missiles toward neighboring countries, prompting retaliatory US strikes on Qeshm Island.