AUGUST CHINA MANUFACTURING PMI & USDCNH PRICE OUTLOOK:
- China PMI data for August is on deck for release and will likely set the tone for risk appetite next week
- USDCNH[1] continues to climb as markets remain on edge in light of ongoing US-China trade war uncertainty
- Take a look at the History of Trade Wars and their impact on financial markets[2]
Caixin China PMI readings for August are expected to cross the wires this week starting Monday at 1:45 GMT and aim to set the tone for risk appetite throughout the week. In contrast to the country’s official PMI readings from its National Bureau of Statistics, which reports on large state-owned firms, the Caixin China PMI data covers a wider sample of small and medium sized businesses.
Although the two reports generally move in lockstep, markets consequently tend to place more credence on the Caixin PMI figures. Nevertheless, the national Chinese manufacturing PMI reading for August was already published late Friday and showed the sector remains in an economic contraction.
AUGUST CAIXIN CHINA MANUFACTURING PMI
That said, the Caixin China manufacturing PMI reading for August is expected to come in at 49.8 as the US-China trade war bites the Asian economy. Although, the Caixin PMI reading for July improved slightly to 49.9 from 49.4 in May. The month of May witnessed a marked escalation in trade tensions, however, and August’s tit-for-tat tariff whiplash from Beijing and Washington poses a downside risk to manufacturing activity in addition to market sentiment. That said, traders will likely keep close tabs on spot USDCNH as uncertainty surrounding the US-China trade war lingers and the trading week progresses.
CHINESE YUAN PRICE CHART – SPOT USDCNH: WEEKLY TIME FRAME (MARCH 2019 TO AUGUST 2019)
We noted previously how the Chinese Yuan
