China manufacturing PMI drops below 50 again


PMI at a three-month low

China’s manufacturing PMI fell to 49.4 in May, the lowest reading since February and below economists’ estimates of 49.9. This marks the fourth month in six that the reading has been below the 50 contraction/expansion threshold, with the new orders sub-index falling deeper into contraction territory while the new exports sub-index slumped dramatically from 51.4 in April to 49.8.

The response in the currency markets saw AUD/USD rebounding from intra-day lows before the release and is now at 0.6912, almost flat on the day. The FX pair currently appears to lack the momentum to break above the 23.6% Fibonacci retracement of the April-May drop at 0.6945.


AUD/USD Daily Chart

Source: OANDA fxTrade


Trump’s tariff target swings to Mexico

US President Trump announced addition tariffs of 5% on all imports from Mexico, effective June 10. He added that the tariff rate would increase steadily from July 1 and could reach as high as 25% until the flow of illegal immigrants into the US stops.

Markets reacted negatively to the developments (even though it was not against China), with the US30 index down 0.69%, and the NAS100 index down 0.74%. China shares bucked the global trend with a 0.18% bounce after yesterday’s sell-off. The China50 index is holding above the 100-day moving average at 12,565, as it has done on a closing basis since January 23.


China A50 Daily Chart

Source: OANDA fxTrade


German CPI seen easing

Germany’s data slate today includes retail sales for April, which are expected to rebound to +0.1% after a 0.2% decline in March, and May’s consumer price index, which is expected to ease off to +1.6%y/y from +2.0% last month. The UK’s Nationwide house prices for April and mortgage data for the same month complete the European session.

The US session features personal income and spending data for April along with the prices index in personal consumption expenditures. That’s seen holding steady at +1.5% y/y, though a weaker reading could prompt more speculation that the Fed might consider a shift to an easing bias. Yesterday Fed Vice Chairman Clarida commented that inflation expectations currently sit at the low end of the range consistent with Fed policy, though the Fed still views this weakness as transitory.


The full MarketPulse data calendar is available for viewing at


Have a great weekend.



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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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