CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

China PMIs slow with Lunar New Year effect

China’s February PMIs disappointed across both manufacturing and services readings with the Lunar New Year effect in play. Rising input prices is worth watching as USD/CNH maintain the sideways action.

February PMIs suggest China still in the sweet spot

The official NBS PMIs, alongside the Caixin manufacturing PMIs, had disappointed in the latest February reading, though having all sustained in expansion territory. Seasonal decline with the Lunar New Year holidays had largely been blamed for the latest slide seeing both the official and Caixin manufacturing readings slipping to the lowest reading seen since May 2020. Notably, demand was seen softening into February as per the new orders and new export orders counters but had largely been viewed to be a result of the Chinese New Year effects.

Over and above the slowdown in both demand and output for the month, the employment gauge had notably also declined with more cautious approach towards staffing levels reported to have sustained according to Caixin’s findings. This again supports more gradual removal of accommodation by the authorities and bodes well for the Chinese market. At the same time, despite the blip that we have seen with the headline number, driven by the holiday effects, firms continue to a positive view on outlook which suggests that things continue to look up for the Chinese economy.

The only caveat here would be the effect of rising commodity prices and the corresponding lift in input costs noted that may dent the performance for smaller enterprises and broad demand going forward, one worth the scrutiny here.

USD/CNH taking a breather from the downtrend

Rising US Treasury yields had lent a hand to the greenback following months of USD/Asians declines. Specifically for USD/CNH, the pair had seen strong support coming through at the 6.40 level that had led to a deviation from the multi-month downtrend channel. Although prices had attempted to trade above its 50-day moving average, signalling upward momentum picking up, it had met resistance towards the 6.50 level. The conflicting forces of rising UST yields and positive fundamentals for China, as illustrated through the latest PMIs updates, could keep the pair rangebound between the 6.40-6.50 level in the near-term awaiting fresh triggers.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.