Chinese Vice Premier Warns Against Yuan Appreciation
Attending a dinner in Washington, Vice Premier Wu Yi warned that a “large” appreciation in the Chinese yuan would hurt the overall economy.  An obvious indication that policy makers are not likely to complete free floating initiatives in the yuan any time soon, the comments simply continue to reflect what the market already knows.  Additionally, the vice premier added that the current trade surplus, which has become one of the main themes of contention involving the US, is being boosted by increased foreign made exports.  Contrary to some notions that the surplus is being supported by Chinese made goods, Wu noted that approximately 85 percent of the trade surplus is being bolstered by foreign companies exporting goods to the US through their own networks located in the mainland rather than Chinese companies applying ultra competitive pricing.  Either way, it seems that policy back-and-forth is likely to continue between both China and the US with plenty in the market still tuning in.  Subsequently, further congressional jawboning continued as Democratic Representative Sander Levin of Michigan yesterday continued to press for further revaluation, claiming the yuan to be undervalued by as much as 40 percent.

Singapore Production Accelerates To 9-Month High
Surprising Sing dollar traders, industrial production reports rose faster than expected in the month of April.  For the month, manufacturing advanced by 18.8 percent on the annualized comparison according to the Economic Development Board, more than twice the consensus estimate.  On a monthly comparison, the figure rose 7.9 percent compared to the revised 9.1 percent decline in March.  The quickest pace in nine months, the production acceleration eases concerns of manufacturing slowdowns that have dominated the headlines recently, leading economic forecasters far and wide to revise growth figure lower.  However, the day’s report supports what government officials have been professing, and that is that the pickup confirms the manufacturing slump may on its way out.  Incidentally, officials raised 2007 growth estimates to as much as 7 percent on the back of semiconductor resurgence last week.  As a result, the market kept the Singapore dollar bidding higher, climbing for the third day to S$1.5270 in the New York morning.

Asian Stocks Have Biggest Weekly Slide In Months
There was plenty of volatility in the stock markets in both the Hang Seng and Straits for the week.  But all in all, rounding the week up, both markets ended up lower as investors remained relatively cautious given the recent run up in regional equities.  The Hang Seng index, for the week, was lower by 1.8 percent, the biggest slide since March 2nd.  Even on the day, shares were battered following comments from Greenspan, noting that China’s stocks may be in for a “dramatic contraction”.  As a result, the benchmark index lost 278.31 points to down at 20,520.66.  Leading decliners were shares in Cheung Kong holdings and Cnooc Ltd.  Cnooc shares continued to drop on lower crude oil gas prices, which plummeted in midday yesterday.  Comparatively, the Straits Times index dropped the most in more than a month after data showed suggestions that the Federal Reserve will likely not cut rates in the short term.  DBS Group Holdings led the decline as the Index slipped 43.63 points or 1.2 percent to close at 3,486.63 ahead of the weekend.

Richard Lee is a Currency Strategist at FXCM.