Risk Gains Momentum Post Solid Chinese PMI

Risk Gains Momentum Post Solid Chinese PMI

By: Ben Myers | Where To Trade | On:25-02-2015 16:14
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Key Highlights

  • Chinese HSBC Manufacturing PMI released earlier today exceeded the market forecast and ignited a sharp rally in the risk assets.

  • Chinese HSBC Manufacturing PMI registered an expansion with a reading of 50.1 whereas the market was expecting it to register a reading of 49.5 in February 2015.

  • Aussie dollar was one of the biggest gainers as it traded higher to test the 0.7900 resistance area.

  • Euro and British pound also enjoyed a good run against the US dollar and traded higher.

  • In the Switzerland, the UBS Consumption Indicator of private consumption trends published by UBS came in at 1.24 in January 2015, compared to the last reading of 1.42.

  • Italian Trade Balance released by the National Institute of Statistics registered a trade deficit of €-0.234B in January 2015, compared to the preceding month in which it was €5.235B.

  • GBPUSD surged higher and broke the 1.5500 level paving the way for 1.5540.

Chinese HSBC Manufacturing PMI

Earlier today, the Chinese HSBC Manufacturing Purchasing Managers Index (PMI) was released by the Markit Economics. The market was expecting a reading of 49.5 in February 2015, compared to the last reading of 49.7. However, the outcome was very encouraging, as the Chinese HSBC Manufacturing PMI jumped above the neutral mark of 50, and posted a reading of 50.1. The estimate is based on approximately 85%–90% of total PMI survey responses each month, according to the report.

Moreover, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC stated in the official report that the “HSBC China Manufacturing PMI improved slightly to 50.1 in the flash reading for February, up from 49.7 in January. Domestic demand firmed while new export orders contracted for the first time since April 2014”. Overall, the data was on the positive side, which helped the pairs such as AUDUSD, EURUSD and GBPUSD.

Swiss UBS Consumption Indicator

The Swiss UBS Consumption Indicator of private consumption trends was published by UBS. The outcome was not a positive one, as the Swiss UBS Consumption Indicator dropped to 1.24 in January 2015, compared to the last reading of 1.42. The report added that the seasonally adjusted new car registrations fell by more than 15%, which was due to higher carbon taxes apply from January 2015. This was one of the reasons the new car purchases to drop. Moreover, the retail sector showed growth and gained by around 10 points, which was on the higher side.

Technical Outlook - Dollar

The US dollar was seen trading lower against most major currencies, as sellers managed to gain control. The USDCHF pair somehow managed to hold the ground, and stood firm above the 0.9460 area. However, there is no doubt that the pair is under bearish pressure and might trade lower if the US dollar buyers fail to defend the mentioned area.

The GBPUSD pair was one of the best performers, which surged higher and traded above the 1.5520 level to test the 1.5540 resistance area.

Ben Myers

Ben Myers

Success = few pips, thousand times

Ben Myers is one of the most respected and trusted names in the financial trading industry. Following a long and successful career with HSBC, Bank of Ireland and running his own investment firm

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