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IMF fails to give China reserve currency status

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The IMF failed to give China reserve currency status. This is mainly because the IMF does not have the power to give China reserve currency status. The IMF does have the power to give China membership of the SDR basket, and that it did (with a slightly lower weight than expected).
  • It is manufacturing sector sentiment day. Economists are a little wary of these sentiment surveys, as they tend to overreact to the underlying data, are biased by the media, and may be subject to gaming by participants. But markets pay attention to them.
  • China's manufacturing sentiment was basically stable. In the Euro area the expectation is for a signal of modest economic expansion. There is, however, quite a lot of political tension around the European time zone which may have a bearing.
  • In the US the ISM is expected to show an uneventful pace of expansion. At the moment it would take a really exceptional data release to shift expectations about policy, and it is comments from Fed members that are likely to matter. In that vein the Fed's Evans is due to speak.