China PMI Solid, EUR/USD Below 1.350

EUR/USD fell below 1.35 for the first time since November on Friday in a move that cracked technical support. Last week, the yen was the top performer while the New Zealand dollar lagged but in early trading those trends have flipped. China's non-manufacturing PMI from HSBC is due out later. 

Traders are wary of betting against a euro fall because of repeated whipsaws in the past few months but with the break of 1.35 along with soft inflation the table is set for shorts. The key will be Thursday's ECB decision but it's sure to be a close call.

On the weekend, China's official manufacturing PMI was in-line with the consensus at 50.5. The market doesn't trust the government as much as private survey from HSBC but it might be enough to ease nerves.

The less-important non-manufacturing PMI from HSBC for China is due out at 0100 GMT. There is no consensus and the prior reading was 54.6. Early in Asian trading, the Australian economy grabbed headlines for the wrong reasons once again as the AiG manufacturing index fell to 46.7 from 47.6. It's one of the final data points ahead of tomorrow's RBA decision.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR +14 vs -4K prior JPY -86K vs -115K prior GBP +22K vs +8K prior AUD -66K vs -65K prior CAD -63K vs -70K prior CHF -1K vs -2K prior

Specs switched to long euros at the worst possible time as EUR/USD finally broke down last week. A trend over the past year has been the resilience of yen shorts when risk aversion increased but the swift change this week suggests heightened jitters this time.