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3 Aug 2015
A big China PMI miss drags Antipodeans lower, final EZ PMIs eyed
FXStreet (Mumbai) - A quieter start to a busy week ahead with a worse than expected China manufacturing PMI report sent Asian stocks as well as Antipodean currencies lower. While USD/JPY is seen holding onto 124 handle, attempting a tepid recovery from Friday’s US data-led drop.
Key headlines in Asia
China's Caixin PMI suffers sharpest deterioration in 2 years
Australia's PMI jumps into expansionary territory
Japan Nomura/ JMMA Manufacturing Purchasing Manager
Index down to 51.2 in July from previous 51.4
Dominating themes in Asia - centered on JPY, AUD, NZD
A set of manufacturing PMIs were reported across the Asia, having major impacts on the Asia-pac currencies. A big miss on the Chinese OMI reading, witnessing sharpest drop in two year weighed on the Antipodeans.
The AUD/USD pair was struggling to hold ground around 0.73 handle, with downside risks exposed ahead of Tuesday’s RBA policy decision and a series of key Australian economic releases later this week. While the Kiwi also remained pressured below 0.66 handle with markets now eyeing GDT price index and employment data from New Zealand in the week ahead for further cues.
The dollar-yen pair rebounded in Asia after witnessing steep losses on Friday following Friday’s poor Employment Cost Index (ECI) induced heavy losses. The ECI index showed a poor increase in US wages during the second quarter, posting only a 0.2% hike, while the first quarter saw a 0.7% jump. Further, the yen was also seen lower after Japanese manufacturing PMI came out below estimates earlier this session.
Most Asian markets were trading in the red with Nikkei in Tokyo losing -0.44% to trade at 20494. While Chinese markets fell on poor China data as well as on lower commodity prices, SSEC -2.43%. The Australian benchmark S&P/ASX 200 is declining -0.43%. While South Korea’s Kospi is down -1.1%.
Heading into Europe - centered on EUR, GBP
A set of July final manufacturing PMIs for the UK, Germany, France, Italy, Spain and the euro zone will be released on Monday, which will kick-off a data-busy week ahead.
The euro zone preliminary manufacturing PMI in July came in at 52.2 and the same result is expected in the final reading. While the flash PMI for Germany's manufacturing sector activity recorded 51.5, with the indicator expected to hold in the final result.
From the UK, the significant manufacturing PMI will be published at 8.30GMT and is seen heading higher to 51.6 from 51.4 recorded in June.
A key week ahead for the North American traders, which begins with the Institute for Supply Management (ISM) and final July surveys for manufacturing on Monday. The former is expected to remain unchanged at a five-month high of 53.5. While PCE inflation gauge is expected to remain unchanged at 0.1%.
GBP/USD Outlook
Valeria Bednarik, chief analyst at FXStreet explained, "During the next week, the BOE will have its monthly economic meeting, and the Minutes will be released alongside, and not two-weeks later as it was until last month. Expectations are for some MCP members voting for a rate hike, which should boost the Pound. In the meantime, the 4 hours chart shows that the price is above its 20 SMA, and above the 200 EMA, this last, flat around 1.5560."
Key headlines in Asia
China's Caixin PMI suffers sharpest deterioration in 2 years
Australia's PMI jumps into expansionary territory
Japan Nomura/ JMMA Manufacturing Purchasing Manager
Index down to 51.2 in July from previous 51.4
Dominating themes in Asia - centered on JPY, AUD, NZD
A set of manufacturing PMIs were reported across the Asia, having major impacts on the Asia-pac currencies. A big miss on the Chinese OMI reading, witnessing sharpest drop in two year weighed on the Antipodeans.
The AUD/USD pair was struggling to hold ground around 0.73 handle, with downside risks exposed ahead of Tuesday’s RBA policy decision and a series of key Australian economic releases later this week. While the Kiwi also remained pressured below 0.66 handle with markets now eyeing GDT price index and employment data from New Zealand in the week ahead for further cues.
The dollar-yen pair rebounded in Asia after witnessing steep losses on Friday following Friday’s poor Employment Cost Index (ECI) induced heavy losses. The ECI index showed a poor increase in US wages during the second quarter, posting only a 0.2% hike, while the first quarter saw a 0.7% jump. Further, the yen was also seen lower after Japanese manufacturing PMI came out below estimates earlier this session.
Most Asian markets were trading in the red with Nikkei in Tokyo losing -0.44% to trade at 20494. While Chinese markets fell on poor China data as well as on lower commodity prices, SSEC -2.43%. The Australian benchmark S&P/ASX 200 is declining -0.43%. While South Korea’s Kospi is down -1.1%.
Heading into Europe - centered on EUR, GBP
A set of July final manufacturing PMIs for the UK, Germany, France, Italy, Spain and the euro zone will be released on Monday, which will kick-off a data-busy week ahead.
The euro zone preliminary manufacturing PMI in July came in at 52.2 and the same result is expected in the final reading. While the flash PMI for Germany's manufacturing sector activity recorded 51.5, with the indicator expected to hold in the final result.
From the UK, the significant manufacturing PMI will be published at 8.30GMT and is seen heading higher to 51.6 from 51.4 recorded in June.
A key week ahead for the North American traders, which begins with the Institute for Supply Management (ISM) and final July surveys for manufacturing on Monday. The former is expected to remain unchanged at a five-month high of 53.5. While PCE inflation gauge is expected to remain unchanged at 0.1%.
GBP/USD Outlook
Valeria Bednarik, chief analyst at FXStreet explained, "During the next week, the BOE will have its monthly economic meeting, and the Minutes will be released alongside, and not two-weeks later as it was until last month. Expectations are for some MCP members voting for a rate hike, which should boost the Pound. In the meantime, the 4 hours chart shows that the price is above its 20 SMA, and above the 200 EMA, this last, flat around 1.5560."