Daily Financial Markets Update: Markets Shaky after Chinese PMI Data – Mar 1, 2016

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Daily Financial Markets Update: Markets Shaky after Chinese PMI Data - Mar 1, 2016

Flash CPI readings from the euro zone weighed on the shared currency throughout the London and New York trading sessions, as investors priced in higher odds of additional ECB easing. The headline figure indicated a 0.2% drop in price levels instead of staying flat while the core figure slid from 1.0% to 0.7%.

EURUSD broke below the 1.0900 support area to a low of 1.0858, EURJPY moved to its previous week low near the 122.50 major psychological level, EURGBP retreated to the .7800 area, and EURCAD slipped lower to test support at the 1.4700 mark.

The British pound, on the other hand, was able to keep its losses in check as traders focused on deflation woes for the rest of Europe. Data from the UK came in line with expectations, as net lending to individuals rose from 4.3 billion GBP to 5.3 billion GBP while mortgage approvals advanced from 71K to 75K.

GBPUSD bounced up to the 1.3950 area, GBPJPY held steady around the 157.15 level, GBPAUD popped up to a high of 1.9518, and GBPCAD bounced off its 1.8720 low. UK manufacturing PMI is due today and a drop from 52.9 to 52.3 is expected.

Commodity currencies weaker on Chinese PMI data

The Aussie and Kiwi appear to be on shaky ground, as the latest batch of PMI readings from China missed expectations. The official manufacturing PMI slid from 49.4 to 49.0 to indicate a faster pace of contraction while the non-manufacturing PMI fell from 53.5 to 52.7 to show a slower pace of growth. The Caixin version of the manufacturing PMI dropped from 48.4 to 48.0, also indicating weaker expansion.

AUDUSD gapped down to the .7110 area also upon seeing downgraded GDP forecasts for the Australian economy, AUDJPY broke below the 80.00 barrier to a low of 79.93 so far, EURAUD is advancing to the 1.5300 resistance, and AUDNZD is down to 1.0771.

The RBA interest rate decision is lined up next and no actual changes are expected for the 2.00% reading. Also lined up for the day is the New Zealand Global Dairy Trade auction which might have a strong impact on Kiwi price action, especially if it results in yet another huge drop in dairy prices and downgraded milk payout forecasts from Fonterra.

NZDUSD is currently trading at the .6600 major psychological support, NZDJPY is moving closer to testing support at the 74.00 mark, and EURNZD is down to 1.6218.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.