First Look at April Chinese Manufacturing

Traders got their first taste of slow summer markets in a ho-hum session on Monday but Chinese manufacturing data will liven up the day ahead. Sterling led the way in the past day while the Swiss franc lagged. US existing homes sales caused a blip in risk sentiment. In addition to the existing shorts in AUDUSD and longs in USDCAD, we added new trades in GBPJPY, EURUSD, USDJPY, gold and silver as well as a monthly Gold/Silver ratio with multi-speed momentum. All trades and charts in the latest Premium Insights.

Economic data was light to start the week but the low-tier existing home sales number caused an outsized move in markets. The data disappointed with sales at a 4.92m pace compared to 5.00m expected.

USD/JPY was teetering at the lows of the day ahead of the numbers and used them as an excuse for a slump below 99.00. Similar 30-40 pip declines hit the euro and commodity currencies but they didn't last long. Sentiment rebounded as quickly as it fell.

The pound was an outperformer for no particular reason. An interesting trend to monitor is the austerity debate. Today's editorial in The Guardian lambasted the UK agenda and PIMCO's Bill Gross criticized the UK for not doing enough for growth. A shift away from austerity could help the pound.

In the near-term the focus is on the April Chinese flash manufacturing PMI from HSBC. The consensus is for a slight decline to 51.5 from 51.4.

AUD/USD has been stubbornly bid in the area from 1.0200 to 1.0230 but a weak reading could spark renewed downside pressure.