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There was good news out of China in the Asia-Pac session with the NBS Manufacturing PMI reading rising above the previous month to 51.9 in March 2021. The data print comes in above market expectation and is the highest reading for 3 months. Purchasing managers reported that they have been able to pass on the higher prices for the materials they are buying to the end customer as input and output prices rose. China’s Non-Manufacturing PMI rose by 3.7 points to 56.3, also beating market estimates. USDCNH is pinned around the 6.5750 level after it based out around 6.450 in mid-February 2021. If 6.5800 is the ceiling for the USDCNH and the Chinese currency appreciates on the back of increasing good data, we could see the DXY also come under a bit of pressure if it fails to get above 93.50. The USD’s run-up has been super bullish these last few weeks, but it is now trading exactly halfway within the range carved out from last Autumn.
Australian housing data in the overnight session got a lift by 21.6% month-over-month in February 2021, beating market analysts’ expectations and reversing from the January 19.4% decline. Approvals for private houses jumped 15.1 percent boosted by the Homebuilder grant. In the UK annual house prices grew by 6.9% in February of 2021 from 6.4% in January, and like the Australian data beat market expectations. It would seem the tax breaks given to stimulate the housing market worked as people rushed to get a purchase through before the initial March cut-off for stamp duty reduction. The increased demand to move could have been undone by the banks not willing to lend but seemingly that did not happen, and more money flowed into the housing markets boosting prices. The AUDUSD has come under pressure from the strong US dollar and also from political unrest between Australia and China, with China looking elsewhere for commodities. AUDUSD above 0.7600 is still higher than prices seen since 2018 and is above the daily 200 ema. Though current momentum is to the downside as the daily swings are making lower highs and lower lows. 0.7400 looks like the most obvious target as there is the market structure from a previous swing high plus the daily 200 ema.
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The UK’s deflationary pressures could lead to a recession but GDP limps on at positive 1.3% for the previous quarter. The Gross Domestic Product (GDP) for the United Kingdom contracted 7.30% in the fourth quarter of 2020 over the same quarter of the previous year. The coronavirus pressures through lockdown have now resulted in 4 quarters of negative GDP growth year-on-year. One way the GDP figure could be boosted is if the UK follows the USA into a massive infrastructure spending plan assuming the Tories still want to level up the entire country. Business investment data was positive this morning but only marginally so, coming in 1.3% quarter on quarter in the last three months of 2020. Market analysts had been expecting a jump to 14.5% in Q3 but overall, the GBPUSD has found the momentum of change in GDP more positive and is rising into the London open and on the weekly chart is way above the Ichimoku cloud suggesting that this recent price action is a bull market correction. If the Hourly candles can get above the cloud, this could signal a change in the near-term direction with ActivTraders sentiment indicator showing traders are evenly spread between the bulls and bears.
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Today we have German labour market data as well as eurozone inflation data. We have the US ADP employment data which could indicate whether the market whispers of a big NFP figure have any merit. OPEC+ is meeting and could move the oil markets if they come to an agreement. But the main focus will be market positioning before the US President announces his spending and taxation plans.
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