China's manufacturing sector weakened further to test risk appetite ahead of January's nonfarm payroll and wage growth figures out of the U.S.
Economic data released through the Asian session this morning included manufacturing and wholesale inflation numbers out of Australia, Japan’s job-applications ratio and January’s Caixin Manufacturing PMI out of China.
For the Aussie Dollar, the AIG Manufacturing Index rose from a revised 50.0 to 52.5 in January.
The Aussie Dollar moved from $0.72723 to $0.72756 upon release of the figures that came out ahead of the wholesale inflation numbers, and China’s manufacturing PMI.
In the 4th quarter, wholesale inflation prices rose by 2%, year-on-year, easing from the 3rd quarter 2.1%. Quarter-on-quarter, wholesale prices rose by 0.5%, coming up short of a forecasted 0.6% and 3rd quarter 0.8%.
According to the ABS,
The Aussie Dollar moved from $0.72754 to $0.72704 upon release of the figures that preceded the PMI number out of China.
For the Japanese Yen, the jobs to application ratio held steady at 1.63 in December, which was in line with forecasts.
The Japanese Yen moved from ¥108.868 to ¥108.860 against the Dollar, upon release of the figures, before rising to ¥108.87 at the time of writing, up by 0.02% for the session.
Out of China, the Caixin Manufacturing PMI came in at 48.3 in January, falling short of a forecasted 49.5 and December 49.7. The PMI was the lowest since Feb-16.
The Aussie Dollar moved from $0.72528 to $0.72433 upon release of the figures, before sliding to $0.7241 at the time of writing, a loss of 0.44% for the session, data out of China doing the Aussie Dollar few favors.
Elsewhere, the Kiwi Dollar was down by 0.06% to $0.6912.
For the EUR, it’s another busy day ahead on the economic calendar. Key stats include January manufacturing PMI numbers and preliminary January inflation figures out of the Eurozone.
Barring a revision to Germany’s prelim figures, focus may well be on Italy’s manufacturing sector numbers. The sector contracted in December and the markets will be looking for a bounce back at the start of the year. Inflation figures will have also have an impact. Forecasts are for softer numbers and a weaker EUR.
At the time of writing, the EUR was down 0.05% to $1.1442.
For the Pound, economic data due out later this morning is limited to January’s manufacturing PMI. Numbers in line with or weaker than forecast won’t be doing the Pound any favors.
We would expect the focus to remain on Brexit chatter, with a no-deal departure from the EU becoming an ever more likely outcome should the EU maintain their stance on negotiations.
At the time of writing, the Pound was down by 0.11% to $1.3094, with Brexit chatter remaining the key driver through the day.
Across the Pond, it’s a big day for the Greenback. Key stats due out later today include January’s unemployment rate, wage growth, and nonfarm payroll figures, the market’s preferred ISM manufacturing PMI numbers, the Markit Manufacturing PMI and finalized consumer sentiment figures.
The unemployment rate, nonfarm payroll, and wage growth figures will be the key driver on the data front. On the nonfarm payroll numbers, any revisions to December numbers would also need to be considered.
Outside of the labor market figures, the ISM manufacturing PMI will also have an impact. The market will be looking for clues on the direction of the economy at the start of the 1st quarter.
At the time of writing, the Dollar Spot Index was up 0.04% to 95.619.
For the Loonie, it’s a quiet day on the data front, leaving the Loonie back in the hands of market risk sentiment and the influence of today’s stats out of China and the U.S on crude oil prices.
The Loonie was down by 0.18% to C$1.3149, against the U.S Dollar, at the time of writing.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.