The preliminary HSBC Purchasing Manager’s Index (PMI) in China showed that China’s manufacturing activity slowed less quickly in April than it has done for the previous month. The PMI is an important indicator of manufacturing activity, which the Chinese economy – 2nd largest in the world – relies upon heavily. A reading below the 50 level shows contraction in the manufacturing sector and the HSBC index has stayed below that level for 6 consecutive months now. The HSBC Purchasing Manager’s Index (PMI) increased to 49.1 from the 48.3 level recorded in March, tempering fears of a quick slowing down in the Chinese economy. Earlier this month the Q1 GDP came in at 8.1%, down from 8.9% in the final quarter of 2011, the slowest pace of expansion for nearly 3 years. Markit Economic Research, who publishes the index, said the latest figures “pointed to a slower pace of deterioration than in March, largely reflecting slower rates of decline of manufacturing production and new orders”.
Despite decent volumes of trading as Asian markets opened, investors are turning their attention to the Fed Reserve monetary policies later on in the week. Satisfied with the debt auctions in Spain last week, there is a wait and see policy regarding the Euro as various manufacturing PMI data from the Eurozone is released this week, as well as a French election, which at the moment seems largely to have unaffected trading. The EUR/USD was down 0.17% at time of trading, 5.08am GMT – trading at 1.3195. The biggest fall in the markets so far was seen in the AUD – down 0.33% against the USD following on the Australian producer price inflation falling unexpectedly to a seasonally adjusted -0.3% in the previous quarter, from 0.3% in the final quarter of 2011.
Today, traders should keep an eye on the Euro as a raft of manufacturing and services PMI data are being released from Europe and the Eurozone this morning.
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