USD/CNH, AUD/USD: Spluttering services sector activity in China is hardly new news
With policymakers continuing to rollout stimulus measures, it’s questionable whether the USD/CNH pop will last.
Share this:
China’s services sector continues to slow, generating renewed downside pressure on the offshore Chinese yuan and Australian dollar against the US dollar. But with the data merely confirming what many already knew, and with policymakers continuing to rollout fresh stimulus measures, it’s questionable whether the selling will last.
Caixin Services PMI hits CNH, AUD hard
The Caixin China general services PMI fell to 51.8 In August from 54.1 a month earlier, hitting the lowest level this year. While above 50 indicating an expansion in activity levels, the slowdown adds to evidence that weakness in China’s manufacturing sector is now spreading to larger parts of the economy. Within the report, new orders declined for the first time this year while input price inflation eased by the most in six months.
All very gloomy but hardly different to the message contained in the government’s own services PMI released last week. It’s not only known information but explains why Chinese policymakers are actively moving to stimulate domestic demand already, pointing to the potential for the initial market reaction to fade.
Source: Trading View
USD/CNH broke the downtrend that’s been in place on the 4-hourly chart following the PMI release but has since pulled back. A failure to sustain the break may see a pullback towards minor support at 7.2700. Below that, long-standing uptrend support is located around 7.2500.
As mentioned previously, the catalyst for the move was largely identical to information received last week and we’ve seen a lot of new positive news flow since then.
-- Written by David Scutt
Follow David on Twitter @scutty
How to trade with City Index
You can trade with City Index by following these four easy steps:
- Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the market you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/MXN Analysis: Is Super Peso Starting to Fade?
Over recent trading sessions, the Mexican peso has continued to show signs of weakness against the U.S. dollar. This can already be seen in USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting sustained buying pressure in favor of the dollar in the short term.
AUD/USD hammered by US yields and fading RBA hike bets
US yields, dollar strength and fading RBA hike bets have combined to drive AUD/USD to fresh multi-month lows. The macro and technical bias remains bearish, although history suggests parts of the move are now reaching unusually stretched levels.
The RBA Hiked Rates and the Australian Dollar Still Fell
AUD/USD fell after the RBA rate hike because the central bank's hawkish stance was already priced in while the U.S. dollar stayed firm.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.