Markets shrug off weak China PMI data

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China

Today’s Economic events

  • Australia AIG Manufacturing index 53.5 vs. 51.5 previously
  • Japan household spending y/y -3.10% vs. -2.50%
  • Japan unemployment rate 3.20% vs. 3.30%
  • Japan capital spending q/y 8.50% vs. 8.80%
  • Australia building approvals m/m -7.50% vs. -2.90%
  • Australia current account -21.1bn vs. -19.8bn
  • China manufacturing PMI 49.0 vs. 49.4
  • China non-manufacturing PMI 53.7 vs. 53.5 previously
  • China Caixin manufacturing PMI 48.0 vs. 48.4
  • Japan final manufacturing PMI 50.1 s. 50.2
  • RBA leaves cash rate unchanged at 2.0%
  • Australia commodity prices y/y -21.60% vs. -24.80%
  • Switzerland retail sales y/y 0.20% vs. -1.20%
  • Spain manufacturing PMI 54.1 vs. 54.3
  • Switzerland manufacturing PMI 51.6 vs. 49.6
  • Italy manufacturing PMI 52.2 vs. 52.2
  • France final manufacturing PMI 50.2 vs. 50.3
  • Germany final manufacturing PMI 50.5 vs. 50.2
  • Eurozone final manufacturing PMI 51.2 vs. 51.10
  • UK manufacturing PMI 50.8 vs. 52.3
  • Eurozone unemployment rate 10.30% vs. 10.40%
  • Canada GDP m/m 0.20% vs. 0.10%

Coming up

  • Canada RBC manufacturing PMI
  • New Zealand GDT price index
  • US ISM Manufacturing PMI
  • US Final manufacturing PMI
  • US Construction spending m/m
  • US ISM manufacturing prices

The markets opened the first trading day of March with a focus on the macroeconomic releases. Data from the Asian session saw a steady flow of economic releases keeping the markets busy. Japan’s household spending declined -3.10% against estimates of -2.50% decline. The data was offset by a lower unemployment rate at 3.20% against estimates of 3.30%. Capital spending in Japan was also modestly better although falling below the estimates of 8.80% and rising 8.50%. Manufacturing PMI data was soft, rising 50.1 against forecasts of 50.2. The Yen, which was trading stronger yesterday managed to trim its gains into the overnight trading session and weakened by today’s market open. USDJPY is up a modest 0.24% for the day, trading at 112.97 after a brief run-up to session highs near 113.2.

Data was Australia today saw the building permits falling strongly, down -7.50% against estimates of -2.90%. Australia’s current account was down -21.1 billion, more than the estimated -19.8 billion. The main focus was, however, the RBA’s interest rate decision. The Central Bank held rates steady at 2.0% and the tone of the statement was mostly neutral. However, with inflation remaining a drag and recent unemployment rate rising back to 6.0% the RBA is expected to make a rate cut later down the line should there be no signs of a pickup in economic activity. AUDUSD was volatile as expected with the Aussie falling to session lows of 0.711 before rallying strongly to session highs above 0.7185. AUDUSD is currently up 0.30% for the day at the time of writing.

NZDUSD was showing signs of recovery following the sharp declines since last Friday. For the day, NZDUSD is up 0.22%, trading at 0.66 ahead of the Global Dairy Trade Index data due for release later this evening.

The Asian equity markets were trading higher today with the Nikkei225 up 0.37% and the Shanghai composite up 1.71% for the day. The gains came despite continued weakness in China’s manufacturing which fell to 2011 lows.

The European session opened with manufacturing PMI data due. Eurozone final manufacturing PMI was modestly higher at 51.20, rising above 51.10 estimates with Germany, France and Spain’s manufacturing PMI all rising softly above the forecasts. There was further good news for the Eurozone, as the unemployment rate fell to 10.30%. However, EURUSD shrugged aside the good news as the countdown begins to the ECB’s meeting on March 10th. EURUSD is flat, up 0.03% for the day, trading at 1.087 following the declines from last Friday.

In the UK, British Manufacturing PMI was weaker, rising 50.8 and below the estimates of 52.3. The British Pound shrugged aside the data despite some intraday volatility. GBPUSD is looking to close today’s session with gains, already up 0.42% for the day, trading at 1.397 at the time of writing.

European equity markets are also higher today with the German DAX up 1.26% while the London FTSE100 is up 0.53% for the day.

The NY trading session opened with Canada’s monthly GDP report. Data showed an increase of 0.20% from the previous month, beating estimates of an increase of only 0.10%. On a quarterly basis, Canada’s GDP was weaker, rising 0.80%, a sharp decline from 2.40% increase previously. USDCAD, however, slipped on the data with the Greenback down -0.46% for the day against the Canadian dollar.

Further economic releases later in the evening include the all important ISM manufacturing PMI which is forecasted to rise to 48.5 from 48.2 previously. The ISM data will be followed by Construction spending for the month which is expected to show an increase of 0.30%.

On the commodity front, Gold prices are volatile today but trading within a range, up 0.37% at the time of writing as prices continued to fail to close above 1245 handle. WTI Crude oil prices for April delivery are up 1.15% for the day, trading at $34.2 a barrel.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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