Intraday Market Thoughts

China PMI Solid But Focus on Charts

by Adam Button
Dec 1, 2013 22:54

China's official manufacturing PMI edged above expectations, helping AUD to a solid start to the week. The New Zealand dollar is a half-cent higher to start the week on upbeat terms of trade numbers while the rest of the market is flat. A busy day of low-tier economic data starts the week in Asia.

China's official manufacturing PMI rose to 51.4 from 50.5, beating out the 51.1 reading expected. Confirmation of the uptick in factories could come at 0145 GMT when HSBC releases the final reading on its private PMI.

Data has been mixed to start the week. The Australian Industry Group's manufacturing index plunged to 47.7 from 53.2 and has now been in contractionary territory in every month this year except one.

The big surprise was New Zealand Q3 terms of trade data showing a 7.9% jump to the highest since 1973. Despite the NZD/USD jump, there are some concerns in the data, mainly a 2.9% drop in export volumes and 5.6% rise in imports. They were overshadowed by an 8.9% rise in export prices but relying on price gains to balance trade is losing game in the longer-term.

There is a full menu of data for the rest of the day including Japanese capital spending at 2350 GMT and a speech from Kuroda at 0230 GMT. A report from Nikkei suggests companies plan to increase capital spending and the consensus is for a 3.2% rise y/y.

Aside from the news, we focus on the technical breakouts and signals in a number of pairs.

-    GBP/USD piped above the January high on Friday to the highest in two years, also posting the highest weekly and monthly highs in 2.5 years.

-   USD/JPY, EUR/JPY and GBP/JPY: highest monthly closes since Sept 2008

-    GBP/JPY gained nearly 1000 pips on the month

-   USD/CAD highest monthly close since Aug 2008

-    S&P 500 up for 8 consecutive weeks for the first time since 2004

    Aluminum closed at the lowest since 2009

A new set of trades of the Premium Insights will be issued on Monday ahead of this week's BoE, ECB and NFP. We still await the final 1.3630 target in EURUSD, entered at 1.3440. 
Act Exp Prev GMT
Markit Manufacturing PMI (NOV)
51.8 Dec 02 13:58
ISM Manufacturing PMI (NOV)
55.5 56.4 Dec 02 15:00
51.4 51.1 51.4 Dec 01 1:00
50.5 50.9 Dec 02 1:45
Capital Spending (Q3)
3.1% 0.0% Dec 01 23:50
AIG Performance of Manufacturing
47.7 53.2 Dec 01 22:30

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