Forex Marketz Daily Forex News – Fully Markets Update
China’s official Purchasing Managers Index or PMI rose to 50.1 in March. It printed at 49.9 in February and is now a smidgen above the expansion level. For this index, 50 is the demarcation between expansion and contraction. Analysts expected a print of 49.8
This print was better than the flash HSBC reading, released last Wednesday, which showed the factory activity slowed to 49.6. Above the expected 49.2, but still in contraction territory. After the release the AUD/USD stopped six straight trading session of losses jumping to 0.7665 from 0.7611. The Shanghai Composite was 0.8 percent higher after the news.
A pickup in activity with large firms supported this move higher. Probably stemming from a stabilization in the construction sector, which is an encouraging sign. The property sector has been a big drag on the economic growth of the world’s second largest economy. Still there is some bad news coming out today. The office service sector PMI slowed to 53.7 from February’s 53.9. This points to a slowing in demand that China’s businesses still face. This ties the one year low reached in January.
Earlier this week, on Sunday, the People’s Bank of China (PBOC) made a move to boost the property market. The central bank slashed the down-payment requirement to purchase a second home. They also waived taxes on certain purchases. This is a sign there will be more easing emerging from Beijing. Since November, the PBOC has cut interest rates twice and lowered its reserve requirement ratio (RRR) for commercial banks once. They are trying to stimulate economic growth as the economy slowed to 7.4 percent. This is the lowest level of growth since 1990.
The PMI that was released today is not encouraging. It is just above 50. There are still concerns about the fundamentals the country is facing concerning economic growth. There is market expectations, or trepidations, the GDP growth will fall below seven percent in the first quarter. This number will be released shortly.
