China services PMI from Caixin/Markit: 51.8 in January (vs 52.5 Dec)

Ross J Burland FXStreet

The January China services PMI from Caixin/Markit came out at 51.8. The consensus was 52.0 vs 52.5 in Dec. However, the survey was conducted too early to capture the acceleration of the Wuhan coronavirus outbreak.

Growth in China's services sector slowed for a second straight month in January, a traditionally busy sales season, hitting a three-month low as companies cut prices and new orders dipped, a private sector survey showed on Wednesday.

Caixin's composite manufacturing and services PMI, also released on Wednesday, slowed to 51.9 in January from 52.6 in December.

China services

51.8 vs 52.6 expected and vs 52.5 Dec.

This data is still higher than an 8-month low hit in October but it is evident that the sector still faces persistent challenges despite a flurry of stimulus and a US-China trade "Phase 1" deal.

FX implications

AUD/USD has taken its cues from the Reserve Bank of Australia in the main. There is a support structure in 0.6707 in AUD/USD to target following the 28th Jan range's 61.8% Fibonacci retracement target being hit on the RBA. As for AUD/JPY, a re-run of 72 the figure at the next breakdown in fickle sentiment could be on the cards. For now, the bulls eye a correction back to the 74 handle to complete a 38.2% Fibo retracement. A 50% mean reversion opens the mid-74.00s.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD sits near a one-month top, above 0.7000 amid fresh USD selling

AUD/USD holds above 0.7000 through the Asian session, trading near a one-month high touched earlier this Monday amid renewed US Dollar selling. US bond yields decline further amid a modest pullback in crude oil prices, capping the USD recovery from a three-week low. Moreover, bets for a November RBA rate hike support the Aussie, though upside seems capped ahead of the crucial two-day FOMC meeting, starting Tuesday.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold consolidates near $4,000 as recovery remains fragile ahead of Fed decision

Gold (XAU/USD) consolidates modest gains on Monday after last week’s sharp decline pushed the metal to $3,975, its lowest level since August. A pullback in Oil prices offers support as traders react to diplomatic efforts to ease tensions in the Middle East.

Bitcoin stalls around $80,000 as geopolitical tensions dampen risk appetite

Bitcoin hovers around $80,500 on Monday after three straight weeks of correction. Rising geopolitical tensions in the Middle East continue to push oil prices higher, stoking inflation concerns and dampening risk appetite.

Everyone's bracing for a hawkish central bank week. Here's why the surprise could be dovish

Five of the world's major central banks are preparing to announce monetary policy decisions this week, with investors increasingly anticipating higher interest rates as the global energy shock continues to push inflation above target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.