The Purchasing Managers’ Index, compiled by China’s logistics federation and the National Bureau of Statistics, rose to a one-year high of 53.1 in March from 51 in February.
As Australia’s largest trading partner, China’s news caused AUD/USD to spike up a hundred pips from Friday’s closing price.
Other risk assets followed suit.
Oil rose as much as 0.5% to hit $103.58 per barrel yesterday afternoon.
Numbers in Asia were also positively affected by China’s PMI figures. South Korea, Asia’s forth largest economy, saw a rise of 0.8% on their benchmark Kospi Index.
Amidst the euphoria which the markets so desperately need, analysts gave a cautious warning.
Although the PMI figure was reported as positive, the PMI figures from HSBC Holdings and Markit Economics actually reported a four-month low reading of 48.3. This contrasting figure showed that manufacturing and export orders actually declined.
The difference between the official figures reported by the National Bureau of Statistics and the unofficial figures reported by HSBC caused some volatility in the markets.
After spiking up 100 pips on yesterday’s opening, the AUD/USD pair fell 60 pips.
Elsewhere in Europe, finance ministers announced the firewall package over the weekend.
Essentially, they would commit 500 billion Euros in fresh bailout funds on top of 300 billion Euros already committed to rescue programs.
This figure does not take into consideration the one trillion Euros which the European Central Bank (ECB) lent to aid the region’s banks.
In a separate meeting this month, the G20 will decide whether Europe has done enough to warrant increased resources from the International Monetary Fund (IMF).
Over the weekend, Europe’s finance ministers insisted that they have fulfilled their side of the bargain.
Although EUR/USD spiked to a one-month high of 1.3380 when the news was reported, here’s a sobering thought.
The 500 billion Euros in fresh funds is not enough to bailout Italy and Spain. Over the next 3 years, Italy needs more than 500 billion Euros while Spain needs more than 300 billion Euros.
The commitment of 500 billion Euros is unfortunately, not enough to bailout Europe’s 3rd and 4th largest economies.
Top News This Week
Interest Rates announcements from Australia, Europe and UK throughout the week. I expect figures to remain unchanged at 4.25%, 1% and 0.5% respectively.
USA Non Farm Payrolls. Friday, 6th April, 8.30pm. I expect figures to come in above 205K (previous figure was 227K).
Trade Call
Short NZD/USD at 0.8175
On the H1 chart, an uptrend channel has been spotted on NZD/USD.
The bias is to go for a short once prices break below the lower channel and the minor resistance level located at 0.8182. We will go short once prices fall to 0.8175, which is 7 pips lower than the resistance level.
A stop loss of 40 pips is placed, which is located above the previous high. We will have 2 targets on this trade, First profit is taken at 0.8135 and the final position is exited at 0.8095.
Entry Price = 0.8175
Stop Loss = 0.8215
1st Profit = 0.8135
2nd Profit = 0.8095
Stop Loss = 0.8215
1st Profit = 0.8135
2nd Profit = 0.8095
(Source: Mariosingh.com)
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