Bitcoin, Ethereum, Dogecoin Gains Trail Stocks — Fed Chair Warns of Pain Yet to Come in Fight Against Inflation

1. The U.S. SEC and CFTC plan to divide the regulation of cryptocurrencies.

2. China's Foreign Ministry: The RMB successfully passed the SDR valuation review with its weight increased.

3. Former Fed Chair Ben Bernanke: The Fed's slow response to inflation 'was a mistake.'

4. Russia decides to withdraw from the Council of Baltic Sea States.

5. Russian Defense Ministry: Ukrainian soldiers in Azovstal steel plant and "Azov Battalion" has surrendered.

6. Japanese government passed a supplementary budget to deal with high prices.

7. WHO says the COVID-19 may spread rapidly in North Korea, and remdesivir has limited efficacy in hospitalized patients.

The U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) are working on a document that will divide the work between the two in regulating cryptocurrencies, SEC Chair Gary Gensler said at the 2022 FINRA Annual Conference on May 16.

China's Foreign Ministry spokesman Wang Wenbin hosted a regular press conference on May 17. Wang said that the IMF Board of Governors recently completed the five-yearly valuation review of the Special Drawing Rights (SDR), and the RMB has successfully passed the SDR review with its weight further increased. In the next stage, China will continue to firmly promote the reform and opening up of the financial market and further simplify the procedures for foreign investors to enter the Chinese market for investment, Wang said.

The unemployment rate may not be a good indicator of whether the labor market is hot or not, and the number of job vacancies is the right indicator to judge how tight the labor market is, Former Federal Reserve Chairman Ben Bernanke said in an interview with CNBC.

Russia has decided to withdraw from the Council of Baltic Sea States, the Russian Foreign Ministry announced in a statement on May 17. In the statement, the Russian Foreign Ministry said that NATO and EU member states in the Council of Baltic Sea States have abandoned principles such as equal dialogue and turned the organization into an instrument of their anti-Russian policy. In response to the hostilities, Russia decided to withdraw from the organization.

The Ukrainian soldiers and the Ukrainian military force "Azov Battalion" besieged in the Azovstal steel plant in Mariupol had surrendered on May 16, Russian Defense Ministry spokesman Igor Konashenkov said on May 17.

The Japanese government passed a supplementary budget for 2022 at a meeting of cabinet members, totaling 2.7009 trillion yen approved to deal with high prices.

The World Health Organization (WHO) issued a warning on Monday about the pandemic outbreak in North Korea. The U.S. Food and Drug Administration (FDA) refused to authorize the antidepressant as a treatment for the COVID-19. Studies suggest that remdesivir has no significant effect on COVID-19 patients who are already on ventilators. Among other hospitalized patients, it has a small effect on death or progression to ventilation (or both).

09:30 National Bureau of Statistics of China releases the monthly report on residential property prices in 70 large and medium-sized cities

10:00 China April Pipeline Gas Imports - Clean Energy

14:00 U.K. CPI YoY (Apr)

-- U.K. Core CPI YoY (Apr)

14:00 U.K. Input PPI YoY (Not SA) (Apr)

14:00 U.K. Retail Price Index YoY (Apr)

15:00 The State Council Information Office of China will hold a Policy Briefings of the State Council on Wednesday, May 18, 2022 at 3:00 p.m., inviting Xu Xiaolan, Vice Minister of the Industry and Information Technology, and the relevant persons in charge of the China Banking and Insurance Regulatory Commission and the National Bureau of Statistics of China to introduce the situation related to alleviating the difficulties and supporting the healthy development of small and medium-sized enterprises and answer reporters' questions

17:00 Eurozone Reconciled CPI YoY Final (Not SA) (Apr)

17:00 Eurozone Core Reconciled CPI YoY Final (Not SA) (Apr)

18:00 U.K. CBI Industrial Orders Differential (May)

20:30 U.S. Construction Permits MoM (Apr)

-- U.S. Annualized Construction Permits Total (Apr)

20:30 U.S. Annualized New Housing Starts MoM (Apr)

-- U.S. Annualized New Housing Starts Total (Apr)

20:30 Canada Central Bank Core CPI YoY (Not SA) (Apr)

20:30 Canada CPI YoY (Apr)

-- Canada CPI MoM (Not SA) (Apr)

-- Canada Central Bank Core CPI MoM (Apr)

-- Canada Core CPI Ordinary YoY (Apr)

22:30 U.S. EIA Crude Oil Inventory Change for the Week Ended May 13

-- U.S. EIA Gasoline Inventory Change for the Week Ended May 13

-- U.S. EIA Refined Oil Inventory Change for the Week Ended May 13

22:30 U.S. EIA Weekly Crude Oil Imports for the Week Ended May 9

TBD Germany Hosts a Meeting Of G7 Finance Ministers and Central Bank Governors

Indonesia will drop requirements for people to mask up outdoors and for vaccinated travellers to show negative pre-departure tests, officials said on Tuesday, as Covid-19 infections decline in the Southeast Asian country.

"When people are doing outdoor activities, or in open areas that are not crowded with people, then they are allowed not to wear masks," President Joko Widodo said in a televised address.

But masks must still be worn indoors and on public transport, he said, also recommending the elderly and those with underlying health conditions or coughs continue to use them as well.

The new mask rules take effect on Wednesday.

Indonesia will also no longer require a negative pre-departure test for foreign and domestic travellers, Health Minister Budi Gunadi Sadikin told a news conference.

The latest measures were part of the country's transition to living with the virus, Sadikin said.

In March, Indonesia lifted quarantine requirements for overseas visitors, joining a number of other countries in the region including Malaysia, Singapore, Thailand, Cambodia and the Philippines that have announced or already made such moves.

The country has largely recovered since an omicron-driven surge peaked at around 64,700 cases a day in mid-February. New confirmed daily infections have fallen to around 200, and about 80 per cent of the eligible population of 208 million has been fully vaccinated.

The government has already lifted many restrictions on social mobility that have been in place for two years.

The easing of pandemic restrictions in Indonesia follows countries like Singapore, South Korea and Malaysia which also dropped their outdoor mask mandates in recent weeks.

The US stocks rallied on dip-buys as the retail data came better-than-expected in April, indicating the economy is still on a strong ride despite decades-high inflation. Fed Chair Jerome Powell reaffirmed his stance on interest rates to curb inflation. The US Treasury yield jumped on the comments.

In addition, the major Chinese tech stocks, including Alibaba, JD.com, Tencent, and Baidu, all jumped between 4-6% after a meeting held by the National Committee, aiming to promote the "digital economy".

The S&P/ASX futures rose 0.98%, pointing to a higher open in the ASX. The benchmark index futures price had a bullish break-out the key resistance at the descending trendline and consolidates above the 10-day moving average, finishing at 7,181. The wage data will be a focus for the local currency's movement as a strong earnings growth could strengthen the odds for the RBA to accelerate rate hikes in the next meeting. AUD/USD rose for 4 straight trading days, to 0.7034, heading to the next key resistance at 0.7065.

NZX 50 was up 0.46% at the open. The overnight global dairy price printed a 2.9% drop in the average price, or the fifth consecutive decline in the auction price, in which the whole milk powder fell 4.9%, to US$3,934 per ton. But the average price is still at its 7-year high. New Zealand dollar rose strongly against the USD, to 0.6366 in the last 4 trading days, though still at its 11-month low, due to the greenback's weakness in the wake of recovering in the broad risk sentiment.

The Dow Jones Industrial Average was up 1.34%, the S&P 500 climbed 2.02%, and Nasdaq jumped 2.76%.

10 out of 11 sectors in the S&P 500 finished in green, with the growth stocks leading broad market gains as dip buyers piled into the beaten-up tech shares. Financial also rebounded sharply amid rising bond yields.

Tesla CEO Elon Musk delays the Twitter deal due to bot members. He estimates that at least 20% of the daily active accounts are fake, while Twitter claims 5% on its bot members.

Winners: Technology (+2.91%), Materials (+2.86%), Financials (+2.69%), Consumer Discretionary (+2.68%), Industrials (+2.28%), Communication Services (+1.82%), Energy (+1.14%), Healthcare (+1.38%), Utilities (+1.02%), Real Estate (+1.05%)

Losers: Consumer Staples (-1.15%)

Mega-caps were mixed: Amazon (+4.1%), Tesla (+5.19%), Nvidia (+5.28%), Apple (+2.56%), Microsoft (+2%), Alphabet (+1.75%), Meta Platforms Inc. (+1.32%), Netflix Inc (+2.19%).

Big banks jumped on strong economic data and rising bond yields. Citigroup Inc. (+7.56%), Wells Fargo (+3.55%), Goldman Sachs (-0.63%), JPMorgan Chase (+3.14%).

Walmart shares tumbled 11% on a miss on the earnings expectation on inflationary pressure. The company indicates high rising fuel costs, higher levels of inventory, and overstaffing are the major issues that cause a slowdown in growth.

JD.com rose 5% on a beat on the revenue estimate despite the slowest annual growth. The e-commerce giant has also taken a policy tailwind on Beijing's pledge to promote the domestic digital industry.

The broad European stock markets rise on China's optimism and a strong US session. The UK wage growth came in more than estimated, printing at 7% vs. 5.4% expected, promoting the Bank of England to be more aggressive on its rate hikes. The bank indicated recession risks in the last meeting.

The Stoxx 50 (+1.52%), FTSE 100 (+0.72%), DAX (+1.59%), CAC 40 (+1.30%).

Crude oil prices snapped a 4-day winning streak after hitting a 7-week high, finishing lower on Tuesday as traders are cautious about the staged easing lockdown measures in China's major city, Shanghai. The report by Reuters that the Biden administration was due to issue the oil company, Chevron Corp, to negotiate with Venezuela on oil export also added to the price pressure.

WTI: US$112.40 (-1.58%), Brent: US$112.73 (-1.32%), Natural Gas: US$8.30 (+4.37%)

Precious metals trimmed early gains and finished flat, pressured by the risk-on sentiment and rising bond yields.

Spot Gold: US$1,815. 20 (+0.00%), Spot Silver: US$21.63 (-0.01%)

Algaculture products mostly rose further on supply shortages.

Wheat: US$1,277 (+2.40%), Soybean: US$1,678 (+1.30%), Corn: US$800.75 (-1.08%).

US dollar index fell for the three consecutive trading days. Both Eurodollar and British Pound jumped more than 1% against the greenback. The ECB policymaker indicated to keep its plan for a 25-basis-points rate hike in July as a weak Euro could cause the bloc's consumer price instability. Sterling jumped on strong wage growth and employment data in England, enhancing the odds for the BOE to further raise interest rates.

US dollar index: 103.34 (-0.83%)

EUR/USD: 1.0548

GBP/USD: 1.2489

USD/JPY: 129.38

USD/CHF: 0.9939

USD/CAD: 1.2811

AUD/USD: 0.7028

NZD/USD: 0.6330

Bonds yields jumped on Powell's comments.

US 10-year: 2.986%, US 2-year: 2.711%.

Germany bund 10-year: 1.041%, UK gilt 10-year: 1.877%.

Australia 10-year: 3.400%, NZ 10-year: 3.648%.

The leading cryptocurrencies rose in the last 24 hours, along with other risk assets. However, the so-called stablecoin, tether faces threat as US$7 billion has been withdrawn from the supply, according to GoinGecko. The rival token, TerraUSD, collapsed to US 0.13 cents from US$1, which was supposed to be 1-1 pegged with the USD.

Bitcoin: $30,442 (+0.81%)

Ethereum: $2,082 (+2.06%)

Understanding the impact of these essential factors helps traders decide which positions to take in the markets for their chosen pair. Therefore, every trader must study these factors explained below as these will assist them in determining market trends.

Very often, the economic situation in a country is considered the chief factor that determines its exchange rate. However, the economic factors cover a wide range of subject matter. Below, we shall discuss nine significant aspects of a country's financial situation that influence its currency's value in the exchange market.

Generally, inflation is the resulting rate of decline in purchasing power of a given currency over a certain period. High inflation levels mean that a particular currency is losing value rapidly. Under such conditions, the prices of goods and services tend to increase drastically. This situation occurs when too much of one country's currency is in circulation, devaluing its exchange rate through oversupply. Of course, investors are mainly attracted to buying currencies that have lower inflation rates. Therefore, people tend to sell a country's currency with a high inflation rate.

'Tapering' is an absolute term encountered daily in forex trading. It is a strategy used by the Federal Reserve to reduce the amount of money in circulation. The term refers to removing the quantitative easing measures adopted by the Federal Reserve and other central banks to boost their economies. When we talk of tapering, the government has slowed down its asset purchases, including mortgage securities and treasury bonds. Tapering helps slow down inflation as the amount of money in circulation becomes limited. Tapering is a strategy used in a strong economy that does need the Central Bank's help. Of course, investors become drawn toward buying a currency once the government embarks on tapering since its supply will start shrinking.

The employment rate is an economic factor investor pay great attention to before buying or selling a particular currency. It is a way of measuring the average productivity of the country within a specific period. Of course, when more people are employed, it suggests improving productivity within the country. To this end, every country releases its employment rate periodically, say monthly or quarterly.Forex traders often pay significant attention to the US NFP report released every first Friday of the month. NFP, which stands for the Non-Farm Payrolls, is used to measure the total number of newly hired paid workers in the United States except for farm employees, private household employees, government employees, and other non-profit organisations. This report is used to measure the progress of the U.S. economy by demonstrating the increase or decrease in the pace of job creation by a country at the end of each month. As expected, increasing the employment rate by creating more jobs favours an economy. As a result, a country's currency value will appreciate in return. A high unemployment rate would otherwise reduce the country's currency value.

The Gross Domestic Product data, produced annually with a six months interval, is used to measure the total goods and services produced by the country within the said period. This data shows the size of the country's economy. A high GDP growth rate means the country is highly productive and that there is growing demand for its products and services. An increase in output of a country's goods and services generates demand for the country's currency in the forex markets.

Often, interest rates are seen as the additional reward investors get for holding a particular currency for an extended period. Investors tend to buy currencies that offer them high returns. High-interest rates help strengthen the value of a currency and attract more investors. Similarly, high-interest rates encourage saving and discourage borrowing. As a result, the citizens carry out more productive work to earn money which is a good sign for the economy.

Regular borrowing from other nations decreases the value of the country's currency. Increased borrowing by a particular government suggests low productive activity conducted in the country, which discourages investors and devalues the country's currency in the international market.

The trade balance measures a country's ratio of imports over exports. Countries with a high importation rate have a lower trade balance which devalues their currency. On the other hand, those nations with a higher rate of exportation indicate a more labour-productive workforce; hence, their products are sold in other countries. This increases the overall demand for a country's currency in the foreign exchange market.

The Capital Market measures the number of inflows or investments coming into a country, essential data for stock and indices traders. A rising capital market means that investors will purchase more stocks and bonds, which is very good for the economy. In addition, a healthy capital market shows that foreign investors now have confidence in the country's economy, increasing the value of the country's currency.

The monetary policy in place within a country often determines whether investors will come in or not. When harsh economic policies place many limitations on investors, most foreign investors will withdraw or stay away. On the contrary, when the government and central bank's monetary policies are very friendly with lots of incentives for investors, then more foreign investors will come into the country. Therefore, more capital will go into the country's market, creating more demand for the country's currency across borders.

The way investors perceive the ruling government goes a long way in determining their confidence in the country's economy. When a perceived strong leader comes into power, many foreign investors tend to be attracted to the country. Often people define a country by its leaders. The leader's personality and understanding of the capital markets often determine his policy decisions, areas of business he promotes, and incentives given to investors. To this end, Forex traders pay great attention to various political news and events and predict their effects on a country's economy. Often these include shifts in government expenditures and new regulations imposed on particular sectors or industries.

There is always a significant shift and volatility observed in the forex market during national elections in most countries. Often the impact of the election on a country's currency depends on who wins the election and how people perceive the new leader. Also, conducting a referendum or the division of a nation can substantially impact the country's currency. A case study could be made with the Brexit referendum conducted in 2016, which significantly affected the British pound when the U.K. voted to leave the European Union.

Any war incidents always reflect poorly on the affected country's economy and currency simultaneously. Of course, war leads to the destruction of significant physical assets and investments, loss of life and properties, and job losses, among others. A good example is the currently ongoing Russian-Ukraine war. As a result, the Russian Ruble hit its lowest value. Similarly, the war has affected EUR/USD and the European economy, which depends mainly on Russian oil and gas products for increased productivity. Often, commodities such as Gold, Silver, and Crude oil seem to be the most in-demand assets during this period.

Sudden outbreaks of diseases within a country often lead to restricted movements and slow down economic activities. This means decreased production and increased consumption. A country's economy could crumble if such restrictions last long. A clear example of this is the current global pandemic known as the Coronavirus. The United States and the U.K. were the most affected countries by this pandemic. We saw the U.K. generate its worst GDP growth rate in 2020 due to the limitations created by the global pandemic. Some economies are yet to recover fully from the pandemic's negative impact. Often gold seems to be the most viable asset for investment during such volatile periods.

Understanding all these fundamental factors that affect the forex markets will make it easier for traders to attain success in the markets. Understanding and using the above factors in your trading distinguishes forex trading from gambling. Moreover, the above factors undoubtedly help traders decide which positions to take in the markets. Therefore, it is prudent for every trader to pay significant attention to the influence that the factors discussed above are likely to exert on the market.

The UAE and Germany are united by a strong bond of friendship. We can do great things together, to assure a happy future – not only for ourselves but indeed for mankind. Our visions and strategies provide opportunities for joint action. Therefore, at this historical juncture for both countries, we look forward to joining hands for "the next 50".

On May 17, 1972, we established diplomatic relations. In 2004, we signed a strategic partnership. In 2019, this document was upgraded on the occasion of the visit of President Sheikh Mohamed bin Zayed, who was then Crown Prince of Abu Dhabi, to Berlin.

Today we are confronted by major challenges in the world.

The system of international peace and security – "rule of law", instead of "might makes right" – is being challenged, most brutally, but not only by the Russian aggression against Ukraine. Moreover, we face a sustainability crisis. We are depleting our planet's resources faster than they can replenish themselves. And, if we don't emit less greenhouse gases, we will change the climate of our planet, pushing us out of the range in which human civilisation was able to flourish.

Germany and the UAE both thrive on economic openness, international co-operation and high connectivity. Therefore, we both count on a stable global network of relationships. Any disturbance affects us more than countries that have less international exposure. We are also both committed to sustainability and in particular energy transition. Germany aims to be climate neutral by 2045, the UAE by 2050.

This opens windows for deepened co-operation.

For Germany, the UAE is a significant actor with shared goals that we wish to engage with not only on all regional matters, but also on the global Sustainable Development Goals. We wish to defend international law as well as the multilateral approach and negotiations as a means of peaceful conflict resolution – in every region of the world.

Germany is one of the UAE's leading business partners and the UAE is Germany's most important economic partner in the Middle East. Our trading relationship will flourish. For the future, however, there is a new sweet spot. We should invest together in technologies and businesses that will form the sustainable knowledge-based economy and thereby create shared intellectual properties and new revenues streams. As the UAE transitions from a hydrocarbon-oriented economy, it will develop new sectors with deeper value-added chains at home – and German companies offer cutting-edge, competitive solutions. Our markets are mutually beneficial, because they are both platforms for regional and global activity.

Let me name two areas as examples.

One is renewable energy. We launched a bilateral "Hydrogen Taskforce", engaging our ministries, companies and scientists in a systematic process to advance our joint role in the hydrogen economy. Germany will need to import several hundred terawatt hours' worth of hydrogen and derivatives annually. We can co-operate on the upstream (joint production of green fuels), the midstream (transport) and the downstream (technology for industrial use). German industry will be key use-cases for the hydrogen value chain. Already there are two German-Emirati projects to produce green hydrogen in UAE – one in Dubai, one in Abu Dhabi.

The second example is human resources. As the UAE transitions, it will prepare its work force accordingly. Now, qualifying people is in the DNA of German companies. They believe in the saying: "If you think it is too expensive to invest in your employees, just think about how expensive it is not to." We should make this a focal area of our co-operation. Two initiatives merit attention.

The first is "Tadreeb". Ten German companies teamed up with the Technical University of Applied Sciences Wildau and Khalifa University to offer initially 10 Emirati recent university graduates 10-week internships in Germany. The interns stand a good chance of finding employment with participating companies. Launched this year, I expect it to be very successful and scaled up rapidly.

The second is "Der Impuls" – a six-month mentoring programme by senior executives from German companies for Emiratis, recent graduates or young professionals. The first group just completed the programme and was enthusiastic about the real-life learning experience – another initiative waiting to be scaled up.

Also, Emirates National Schools with Germany's GIZ just launched Centres of Excellence for Technical and Vocational Training to help Emirati girls and boys enjoy practical work in technical fields – often the basis for a good profession.

Another area would be culture. There is a meaningful intersection between our experiences to promote tolerance, prevent extremism, advance gender equality and foster happy societies. We can show how to celebrate diversity and love our differences.

We complement each other. The UAE and Germany can together make significant contributions towards a more peaceful and sustainable world. That is also our responsibility. This was the spirit of the meeting between German President Frank-Walter Steinmeier and Sheikh Mohamed, when they met during the condolences for the passing of Sheikh Khalifa.

China's slowing economy will struggle to stage the kind of stunning recovery it achieved from the early depths of the pandemic two years ago, as its formidable export machine is teetering and options to revive investment and consumption are dwindling.

Analysts and policy insiders say that means China's leaders may have to quietly accept economic growth of about 5% for this year, below Beijing's current target of "around" 5.5%, and prospects of a slower "U-shaped" recovery, rather than a rapid "V-shaped" one.

With no end in sight to China's "COVID zero" policy, investors worry a prolonged slowdown in the world's second-largest economy could further weaken the global recovery and that worsening supply chain disruption could fan inflation risks.

That outlook contrasts sharply with 2020, when China's economy roared back from a deep pandemic-induced contraction thanks to a combination of stimulus and surging exports as locked-in global shoppers splurged on Chinese goods.

"China's economic and COVID cycles are different to that in other countries. Back (in 2020), China effectively controlled the COVID outbreak and achieved a rapid recovery in production and reaped benefits," said a policy source who spoke on condition of anonymity.

"This time around, the outside world chooses to lie flat, and we see more negative impact on China as they tighten policies that will hit external demand, putting pressure on China's foreign trade."

Even before widespread COVID-19 curbs in Shanghai and other major Chinese cities hit the economy, private-sector economists considered Beijing's growth target as ambitious.

The United States, Europe and other major economies have chosen to "live with the virus" as they reopen and rely on vaccines to fight the pandemic.

In China, such policies are seen as encouraging inaction against a deadly and highly infectious virus and as such are politically unpalatable.

In 2020, China surged back from its pandemic slump to become the only major economy to grow in a turbulent year, in which the COVID-19 shock forced Beijing to scrap its annual growth target.

On the last day of 2020, Chinese President Xi Jinping declared victory over the pandemic under the banner of the Communist Party, while senior officials touted the ruling party's ability to "turn crisis into opportunity."

That early success means China is now likely to stick with its COVID zero policy until at least a key party meeting toward the end of the year.

Unlike 2020, however, the U.S. Federal Reserve and other central banks are raising interest rates to curb runaway prices, making it harder for the People' Bank of China to ease monetary policy due to worries about capital outflows and local inflation.

Chinese consumers are tightening their belts amid rising job losses and falling incomes, and the government remains reluctant to give cash handouts similar to those used in the United States and Europe, policy insiders say. Some Chinese cities have offered shopping vouchers to residents.

Channeling more money into big-ticket infrastructure projects is China's most viable move, but may not be enough to pick up the slack as property spending weakens, they said.

"Infrastructure, which received full-throated support from President Xi in April, should lead the recovery," economists at Societe Generale said in a note.

"But infrastructure alone won't be enough, and a housing market rebound would be essential for the whole economy to turn around, given that consumption is unlikely to see a proper recovery until the end of the zero-COVID policy."

Economic data this week for April showed China's consumption and factory output fell at a pace unseen since early 2020, when the Wuhan outbreak became a pandemic.

The broad-based slowdown has stoked worries of further job losses, with China's nationwide survey-based jobless rate rising to 6.1% in April, the highest since February 2020 and well above the government's 2022 target of below 5.5%.

Export growth dipped to 3.9% in April, the weakest in almost two years, as COVID-19 curbs shut factories.

Many private-sector economists expect China's economy to shrink in the second quarter from a year earlier, versus the first quarter's 4.8% growth.

Fu Linghui, a spokesman at the National Bureau of Statistics, on Monday played down the possibility of a second-quarter decline.

Similarly, the export sector may benefit from a weaker yuan, which has fallen about 6% to the dollar so far this year.

"As companies face difficulties, appropriate yuan deprecation will help boost their competitiveness," said Zong Liang, chief researcher at state-owned Bank of China.

Analysts at Citi now expect the economy to contract 1.7% in the second quarter, versus previous projections for a 4.7% expansion.

The bank has cut its 2022 growth forecast to 4.2% from 5.1% but still sees scope for Beijing to prevent a more destructive slowdown.

"The worst is perhaps over as the government looks to step up its support," Citi analysts said in a note.

"In addition, China still has policy options. At this juncture, a timely and decisive rollout of real stimulus measures is really critical to bring growth back on track."