Manufacturing PMI at 50
The Australian dollar recouped early losses in today’s Asian session after China reported its manufacturing PMI at 50.0 in January, in line with expectations. It was slightly lower than December’s 50.2 print, but was the third month in a row the index avoided falling into contraction territory.
AUD/USD had slid to an intra-day low of 0.6705 since the open, but after the data recovered back to 0.6715, slightly negative on the day. AUD/JPY is now down 0.024% at 73.22 after touching a 3-1/2 month low of 72.80 yesterday.
AUD/JPY Daily Chart
China delays return to work
Some Chinese provinces, including Hebei, the largest steel-producing province in China, have decided to extend the Lunar New Year break beyond February 9, while Shandong and Heilongjiang provinces have asked companies not to resume working until February 10, due to the coronavirus outbreak.
China reported 1,982 new cases of the coronavirus yesterday bringing the total so far to 9,692 confirmed cases. The death toll from the virus has risen to 213.
USD/CNH looks poised to rally for a second straight week this week, bringing the total gains over the two weeks to 1.65%, with the FX pair trading above the key 7.0 mark for the first time since December 26. USD/CNH is now at 6.9780 with the 200-day moving average at 6.9851.
USD/CNH Daily Chart
Pound steady on Brexit Day
The pound was little changed in morning trading, building only marginally on the gains accrued yesterday. The pound was given a slight lift yesterday after the Bank of England kept rates unchanged with a 7-2 voting lineup. A minority had hoped for a rate cut, while most expected the vote spit to be 6-3 in favour of standing pat.
There’s not much on the data front from the UK today, so the Brexit deadline will garner most of the headlines. GBP/USD is now at 1.3099 and is above the 55-day moving average at 1.3048.
GBP/USD Daily Chart
Euro-zone growth seen steady
The Euro-zone economy probably expanded 0.2% q/q in the fourth quarter, the same pace as in Q3, according to the latest survey of economists. The flash reading of consumer prices is expected to show a slight uptick to 1.4% y/y this month from +1.3% in December.
On the US calendar, personal income and spending both probably rose 0.3% m/m in December, while the Chicago PMI is expected to improve to 48.8 in January from 48.2 last month. The week closes with January’s Michigan consumer sentiment seen unchanged at 99.1.
