China's official manufacturing PMI signals stability

China’s official manufacturing PMI held firm month-on-month as it managed to hold above the 50 point mark that separates expansion from contraction, coming in at 50.1 in April. After swinging back above 50 last month the stable figures provide early signs of a firming economy with the extensive measures put in place by policymakers in Beijing and the PBOC finally starting to produce the desired results. However, critics may be quick to argue that more still needs to be done to turn the tide and stimulate growth in the Chinese economy. Having already cut interest rates and reduced the reserve requirement ratio that must be held by banks twice over the past six months it could be argued that now signs of stability are emerging more needs to be done to promote growth. While the official PMI reading offers an indication of a firming outlook, it stood in stark contrast to HSBC’s preliminary PMI reading which last week pointed towards a further slowdown in manufacturing activity as the index fell to 49.2 from 49.6 the previous month.  

The euro posted its largest monthly gain against the dollar in over four years as it snapped a nine month bear run against the greenback in April. After bottoming out towards 1.0500, where most industry commentators expected EUR/USD parity, the single currency rallied 4.59% back above 1.1200 as data coming out of the US throughout the month disappointed. With the euro rising for six consecutive sessions, trading towards a fresh two month high yesterday, the release of additional positive data throughout May could see the single currency experience further strength. However, with the ECB continuing with its QE programme and the expectations of a rates rise in the US the dynamic could soon swing back in the dollars favour.

Initial weekly jobless claims fell to their lowest level in fifteen years to 262K during the week ending April 25th as underlying labour market conditions continued to improve. Market participants had expected 290K initial claims but were pleasantly surprised by the sharp decline. Continuous claims were also down, coming in at 2253K during the week ending April 18th against expectations of 2300K claims. Despite the tightening in the labour market Wall Street stocks experienced firm selling pressure throughout the day as weaker corporate earnings dragged sentiment lower. 

China's PMI reading holds above 50 for second month

CPMINDX Index China Manufacturi 2015 05 01 07 28 50

Euro snaps 9 month bear run in April

EUR Curncy Euro Spot Monthly 2015 05 01 07 38 00

Initial weekly jobless claims fall to 15 year low

INJCJC Index US Initial Jobless 2015 05 01 07 46 48

Events for today

EZ, CN Market Holiday 

0030

JP

Mar

CPI

0200

CN

Apr

Manufacturing PMI

0200

CN

Apr

Non-Manufacturing PMI

0930

UK

Mar

Consumer Credit

0930

UK

Apr

Markit Manufacturing PMI

1445

US

Apr

Markit Manufacturing PMI

1500

US

Apr

ISM Manufacturing

1500

US

Mar

Construction Spending

1500

US

Apr

Michigan Survey

Topics: USD, PMI, EUR, Unemployment
More from: Kash Kamal