Risk sentiments bolstered as trade negotiations going on in Washington sound promising. And China's economy appears to be stabilising. Beijing said it would continue to suspend additional tariffs on US vehicles and auto parts after April 1 in a goodwill gesture after Washington delayed tariff hikes on Chinese imports. A delegation led by Vice-Premier Liu He will be in Washington this week for another round of talks. Reports have indicated that the two sides are still trying to move past disagreement on how to enforce the terms of a deal and the related question of whether US tariffs already imposed on Chinese goods will be lifted immediately. US Trade Representative Robert Lighthizer has suggested in public comments that regardless of whether current tariffs stay in place, terms that allow the US to impose new tariffs unilaterally in response to a breach of contract are a potential enforcement mechanism. The Chinese said that any arrangement must not be one-sided. President Trump recently commented to reporters that the existing tariffs would not be lifted initially as part of a deal.
China's manufacturing activity grew for the first time in four months in March with quicker rises in output and overall new work, according to a private report released on Monday, which also showed the fastest growth in eight months. The Caixin China General Manufacturing Purchasing Managers' Index, which measures the manufacturing sector and is weighted toward private companies, came in at 50.8 in March, rebounding 0.9 percentage points from the previous month, Caixin magazine and research firm Markit said. A reading above 50 signals growth while one below 50 means contraction. The Caixin PMI is a private survey focusing on smaller businesses and offers a first glimpse into the operating environment. It is closely watched as an alternative to the official PMI. The official PMI for March released on Sunday (31st March 2019) was 50.5, compared with 49.2 in February.
CURRENCY NEWS: China's yuan was little higher against the U.S. dollar on Thursday, as investors awaited more news from Sino-U.S. trade talks. Prior to market opening on Tuesday, the People's Bank of China (PBOC) set the midpoint rate at 6.7055 prior to market open, firmer than the previous fix of 6.7194. Spot yuan traded at 6.7139 per dollar at midday, 46 pips weaker than the previous late session close and 0.13 percent softer than the midpoint, mirroring a small rise in the U.S. dollar.
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