Aussie trips up as China PMIs weaken

Manufacturing PMI at 3-year low

More signs of how the Chinese economy is facing headwinds was evidenced by a further weakening in China’s PMI readings in February. The manufacturing PMI slid to 49.2, the lowest since February 2016, and the third month in a row it has been below to expansion/contraction threshold of 50. The non-manufacturing index also softened, sliding to 54.3 from 54.7, the first slowdown in three months. Both PMIs were below economists’ predictions.

Drilling down within the headline numbers, the new export sub-index was 45.2, the lowest since February 2009 while the manufacturing output index was at 49.5, the weakest since January 2009. All-in-all not a very encouraging report.

AUD/USD had touched an intra-day high of 0.7167 shortly before the data, only to tumble to 0.7130 within 10 minutes. The FX is now at 0.7142. The 55-hour moving average at 0.7163 appears to be intra-day resistance.

AUD/USD Hourly Chart

Source: OANDA fxTrade

Trump upbeat, but patient

In comments on the second day of the Trump-Kim summit in Vietnam, US President Trump opined that North Korea could be an economic powerhouse, with parallels being drawn with Vietnam since it opened its markets in 1986. However, Trump said he was in no rush to conclude a deal, and would wait for the right one. Meanwhile, North Korean leader Kim said he had a “hunch” the good results will come of the meeting. The developments had little bearing on FX and equity markets.

You don’t bring a MIG-21 to a gunfight

BOJ to keep expansionary monetary policy

Bank of Japan board member Suzuki said that it was important to maintain powerful monetary easing an appropriately adjust the amount of bond buying dependent of financial institutions’ demand. He added that the central bank will not raise interest rate levels now and will act swiftly through market operations if yields start to rise rapidly. Basically, Japan yields are not going higher. There was muted reaction to the comment from the yen, with USD/JPY edging higher to 110.87 from 110.82.

USD/JPY Hourly Chart

Source: OANDA fxTrade

Q4 GDP growth to grab the spotlight

The much-delayed US fourth quarter GDP is due today, and is expected to show a slowing of growth to +2.3% from +3.4% in Q3. Aside from Q4 GDP, we see US the personal consumption expenditure price index for Q4 and the Chicago PMI for February. Fed’s Bostic and Clarida are scheduled to speak, but neither is expected to differ from Powell’s tone and content in his testimony over the last two days.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.