China data is no April Fools


Strong rebound in PMI readings

Sunday’s release of China PMI readings for March did not quite cross to April so cannot be discounted as an April Fools joke. The manufacturing PMI jumped to 50.5, the highest in six months and the first time it moved above the 50 contraction/expansion threshold in four months. The non-manufacturing PMI also advanced, reaching 54.8, the highest since September last year.

The response in financial markets was predictable, with risk appetite surging across most asset classes. Equity indices were higher across the board with China shares outperforming with another stellar performance, rising 2.1% on top of Friday’s 3.3% gain. The China50 index touched its highest in more than a year.


China50 Daily Chart

Source: OANDA fxTrade


Japan’s data is less inspiring

Japan’s release of its quarterly Tankan survey failed to echo the positive vibes form the China data. In the first quarter, the large manufacturing index fell to 12, the weakest in two years while the non-manufacturing index fell to 21, again the weakest in two years. The more forward-looking manufacturing outlook was steady at 20 but the all-industry capital expenditure number was a disappointment, rising just 1.2% in Q1 after 14.3% growth in Q4. This was also the slowest expansion in two years.

The yen weakened versus the US dollar for the third day in a row, partly due to the risk-on mood and partly due to the weak data. The FX pair has tested the 100-day moving average at 111.10 and now has eyes on the 200-day moving average at 111.46.


USD/JPY Daily Chart

Source: OANDA fxTrade


Can other PMIs match China’s boost?

Looking at the data calendar, surveys are suggesting mixed results for the PMI readings in Europe and the US. The flash Markit readings for German and Euro-zone manufacturing PMIs are not expected to be revised. However, the UK’s number is seen dipping to 51.3 from 52.0 while the US ISM print is seen steady at 52.5. Any signs of an improvement and risk appetite will likely be given another boost.

Other events include (another) UK Parliament vote on Brexit (surely one could not be faulted for calling that a joke?) with US February retail sales completing the day.


The full MarketPulse data calendar can be viewed at



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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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