China: Manufacturing PMI contracts for the 7th straight month in October – UOB Group

FXStreet Insights Team FXStreet

China’s official manufacturing PMI fell by a larger-than-expected 0.8 pt to 49.0 in October (Bloomberg est: 49.6, September: 49.8), UOB Group's Economist Ho Woei Chen report.

October moderation is seen broadly across the main components

"The contraction (reading<50) in manufacturing activities has stretched into the 7th consecutive month, the longest on record which was matched by declines during Aug 2015 – Feb 2016. The larger-than-expected slowdown in October was due in part to the week-long National Day and Mid-Autumn Festival holidays, but also indicated a softening outlook for the manufacturing sector hit by US’ tariffs. The full impact of the tariffs will likely be felt in the coming months while the de-escalation in tensions with the US and a potential trade deal may cushion the impact."

"The moderation in October was seen broadly across the main components of the CFLP manufacturing PMI. Production (49.7 from 51.9 in September) slipped into contraction for the first time in six months. New orders (48.8 from 49.7 in September), new export orders (45.9 from 47.8 in September) and employment (48.3 from 48.5 in September) fell more steeply. By enterprise size, the outlook for large-sized enterprises (49.9 from 51.0 in September), medium-sized enterprises (48.7 from 48.8 in September) and small-sized enterprises (47.1 from 48.2 in September) all weakened in October, led by the large and small enterprises."

"The official non-manufacturing PMI rose 0.1 pt to 50.1 in October (Bloomberg est: 50.1, September: 50.0), with the pick-up in the services index (50.2 from 50.1 in September) offsetting a larger contraction in the construction index (49.1 from 49.3 in September) as the holidays lifted domestic spending and tourism in the month."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold extends fragile recovery from multi-week low as softer bond yields weigh on USD

Gold builds on its intraday ascent through the first half of the European session, and recovers further from a near six-week low, touched the previous day. A modest pullback in US Treasury bond yields prompts some US Dollar profit-taking, which is seen offering support to the commodity. However, the Federal Reserve's hawkish outlook, along with escalating Middle East tensions, should limit deeper losses for the safe-haven Greenback and cap the non-yielding bullion.

Ripple, Cardano, Dogecoin: Downside risk looms amid market uncertainties

Top altcoins, including Ripple (XRP), Cardano (ADA), and Dogecoin (DOGE), face imminent downside risk as prevailing upside momentum recedes toward neutral.

The Fed hawkishly hiked rates

The Fed proceeded with its first rate hike since 2023, as was widely expected. It should be noted that the bank hiked rates against US President Trump’s wishes. It’s characteristic that Fed Chair Warsh stated that 'Inflation is too high and has been for too long’, signalling his hawkish intentions.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.