Intraday Market Thoughts

China PMI Misses, AUD Longs in Peril

by Adam Button
May 2, 2016 1:20

The yen ripped right to the finish line on Friday and is slightly higher to begin the week. China's manufacturing PMI was released on the weekend and edged lower. Holidays could complicate trading to start the week. On Friday, the Premium trades took a 335-pip gain in AUDJPY, while 6 of the 9 existing Premium trades are at in the gain with +100 pip each. The Video below is open for subscribers and non-subscribers alike, containing Ashraf's take on how/why stops were hit 2 weeks ago and how matters change last week.

On Thursday we warned that the pain could be far from complete in yen crosses and that was the case as USD/CAD cracked the April lows, pushed through 107.00 and sank to 106.30. The pair is down 560 pips since the BOJ decision.

Holidays make this a tricky week of trading. China, the UK and parts of Europe are out on Monday. Japan returns from a three-day weekend but only for a day before another three-day holiday begins.

Seasonally, April was a weak month for the US dollar and that proved to be true as it lagged all G10 FX except the Aussie. The situation reverses in May, which is an excellent month for the dollar bulls.

Weekend news was led by the China manufacturing PMI. It slipped to 50.1 from 50.2 and missed the 50.3 consensus. The non-manufacturing PMI also declined to 53.5 from 53.8. The misses aren't likely big enough to spark much of market reaction but the numbers underscore the muddling global economy.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -40K vs -47K prior JPY +66K vs +72K prior GBP -49K vs -55K prior CHF +9K vs +9K prior AUD +59K vs +44K prior CAD +12K vs +7K prior NZD +7K vs +5K prior

These numbers show the setup ahead of the BOJ and Fed, not afterwards. Specs sniffed out how the BOJ would be sidelined and real money piled in. The position that's in peril this week is AUD. It was the worst-performer in April and Stevens may not be friendly on Tuesday.

Act Exp Prev GMT
Markit Manufacturing PMI (APR)
50.8 May 02 13:45
ISM Manufacturing PMI (APR)
51.8 May 02 14:00
Markit PMI Manufacturing (APR)
51 May 02 8:30
Nikkei PMI Manufacturing (APR)
48 May 02 2:00
Eurozone Markit PMI Manufacturing (APR)
51.5 May 02 8:00

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