The China Caixin Manufacturing PMI sent mixed signals. Weakening domestic demand and factory gate price pressures remain a concern.
On Thursday, the Chinese economy was under the spotlight. Disappointing NBS private sector PMI numbers for January impacted riskier assets on Tuesday. However, the Caixin Manufacturing PMI has more weight.
The Caixin Manufacturing PMI remained at 50.8 in January. Economists forecast a decline to 50.6. According to the January survey,
Weaker domestic demand may raise concerns considering stimulus measures from Beijing to bolster the economy. Despite a moderate pickup in demand from overseas, factory gate price trends continued to paint a deflationary backdrop.
Before the PMI numbers, the AUD/USD rose to a high of $0.65782 before falling to a low of $0.65603.
However, in response to the PMI data, the AUD/USD rose to a high of $0.65670 before falling to a low of $0.65595.
On Thursday, the AUD/USD was down 0.09% to $0.65606.
US Manufacturing PMIs and US labor market data will draw investor interest. However, the labor market data would likely warrant more investor attention before the US Jobs Report (Fri). Tight labor market conditions support wage growth, fueling consumer spending and demand-driven inflation.
Economists forecast unit labor costs to increase by 1.6% quarter-on-quarter in Q4 2023 after falling by 1.2% in Q3 2023. Economists predict nonfarm productivity to increase by 2.5% in Q4 after rising by 5.2% in Q3. Significantly, economists expect initial jobless claims to fall from 214k to 212k in the week ending January 27.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.