Intraday Market Thoughts

China Rebound Continues

by Adam Button
Apr 1, 2019 13:13

Global indices extend Friday's momentum into the new week and month thanks to data showing Chinese manufacturing PMI entering into expansionary territory for the first time since September in a sign that stimulus measures are working. The Canadian dollar was the top performer on the week and the quarter as it capped off March with a surprise climb in GDP.  More Brexit drama looms. US retail sales follow shortly. A new Premium trade has just been posted.

The 30% rally in Chinese stocks since the start of the year is telling but the latest economic data also help to show that a massive wave of lending unleashed by policymakers is working. The official manufacturing PMI rose to 50.5 from 49.2 in March. That's better than the 49.6 consensus and the first reading above 50 since September.

There were rumors of an RRR cut on Monday but the PBOC responded and explicitly ruled it out. Still, optimism about a trade deal with the US is high and the Shanghai Composite rose 3.2% on Friday along with a 0.7% rise in the S&P 500.

The Australian dollar opened higher to start the week but has so far failed to benefit from better sentiment but it's a big week for AUD with the RBA meeting and federal budget both coming on Tuesday.

The Canadian dollar has fared better but that's largely because of the rebound in oil prices. It was also helped on Friday by a report showing +0.3% m/m GDP growth in January compared to 0.0% expected. WTI finished the week above $60 for the first time since November.

The focus in the week ahead will undoubtedly remain on Theresa May and Brexit. Weekend reports suggested she hasn't given up on her deal yet and will seek another meaningful vote. Up first is another round of indicative votes in parliament on Monday. Don't forget the US jobs report on Friday.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. This week's report was delayed because of the US holiday.

EUR -80K vs -78K prior GBP -9K vs -14K prior JPY -62K vs -59K prior CHF -27K vs -27K prior CAD -40K vs -48K prior AUD -54K vs -52K prior NZD 0K vs -1K prior

The short position in the euro grew only marginally but it's now the most-extreme since December 2016.

Act Exp Prev GMT
Final Manufacturing PMI [F]
52.5 52.5 Apr 01 13:45
ISM Manufacturing PMI
54.2 Apr 01 14:00
PMI Manufacturing
52.6 Apr 01 13:30
50.8 50.1 49.9 Apr 01 1:45
Eurozone Spanish PMI Manufacturing
50.9 49.8 49.9 Apr 01 7:15
Eurozone Final PMI Manufacturing [F]
47.5 47.6 47.6 Apr 01 8:00
Core Retail Sales (m/m)
0.4% 0.9% Apr 01 12:30

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