Article Highlights

  • Chinese Caixin manu PMI down from 47.8 to 47.1
  • Japanese flash manu PMI up from 51.2 to 51.9 vs. 52.1 forecast
  • Credit card spending up by 9.7% in New Zealand for July
  • Nikkei closed 2.98% lower for the day, Asian equities in the red
  • German and French manufacturing and services PMI due
  • U.K. public sector borrowing report to show 2.3 billion GBP surplus?
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It’s all about the PMIs today, forex fellas! China and Japan got the ball rolling in today’s Asian trading session, with the former showing a sharper contraction in the manufacturing industry for August and the latter indicating a faster pace of expansion.

The Chinese Caixin manufacturing PMI slipped from 47.8 to 47.1 instead of climbing to the projected 48.1 figure. Components of the report show that output, new export orders, employment, and inventories declined during the month. Take note that this is published ahead of the numbers from HSBC and the Chinese government, which suggests that the August readings from these institutions might also reflect weakness.

The Aussie chalked up losses against its forex counterparts after these numbers were printed, as a slowdown in China could mean weaker demand for Australia’s raw material exports. AUD/USD is down 15 pips (-0.22%) after finding a bit of support around the .7300 handle.

The Kiwi seemed immune from this recent comdoll slide since New Zealand reported a 9.7% increase in credit card spending for July. NZD/USD is moving sideways at .6620 (-0.08%) and NZD/JPY is down 38 pips (-0.47%).

As for Japan, the flash manufacturing PMI climbed from 51.2 to 51.9, just a couple of point shy of the 52.1 forecast but still indicative of increased activity in the industry. According to the same folks that reported China’s Caixin PMI, Japan managed to see an increase in output, new orders, employment, output prices, and inventories.

The yen was able to advance against its forex peers after the PMI release, with AUD/JPY looking at a 58-pip loss (-0.64%), USD/JPY lower by 49 pips (-0.40%), and GBP/JPY down by 53 pips (-0.27%) at the 193.00 handle. Risk aversion has also favored the lower-yielding Japanese currency in the past few hours, as Asian equity markets have been seeing a lot of red.

It will be the euro’s turn to see some forex action in the next few hours, with Germany and France set to print their manufacturing and services PMI readings for August. Small improvements are expected from France while Germany could report a bit of a slowdown in both industries. The pound could also enjoy additional volatility during the release of the U.K. public sector net borrowing report, which might show a surplus of 2.3 billion GBP.

See also:

U.S. Session Recap

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