In spite of the widespread moderation in China’s activity data in July, the economic growth is expected to meet this year’s target rate of 6.8 percent in the existing policy environment, according to a Barclays research report. There appears to be no immediate need for policy makers to reverse their stance.

The People’s Bank of China has weakened its tightening bias since the end of May and rebounded regulatory policy coordination. The Barclays Alternative Credit Aggregate implied that broad credit growth recovered to around 15.2 percent in July from 14.4 percent in June. The recovery in growth was seen in all major BACAR components including loans, shadow credit and bond financing.

“We think soft CPI inflation and moderating momentum suggest the central bank likely will maintain a neutral and prudent monetary stance while enhancing fine-tuning, and we do not expect the PBoC to raise short-term policy rates in H2”, added Barclays.

In the meantime, the corporate deleveraging and controlling financial risks are expected to stay the main priority for the authorities in the medium term, as highlighted at the National Financial Work Conference, and the regulatory tightening measures are expected to stay in place.

At 22:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was slightly bullish at 61.2076, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -62.4193. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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