October Markit PMIs across Asia are released, with China being the focus (sponsored by Caixin). This was expected to be unchanged at 50, the threshold between expansion and contraction, as power outages and supply chain disruptions persist.

The data has arrived as follows:

50.6 which beats expectations of 50. 

This is a welcome outcome considering the weekend data. The data arrived as follows: Manufacturing PMI 49.2 vs the expected 49.7, prior 49.6. This was the second month of contraction in a row. Meanwhile, Non-manufacturing PMI fell to 52.4 vs the expected 52.9, prior 53.2 leaving the Composite down at 50.8 vs the prior 51.7. October's manufacturing and non-manufacturing PMI demonstrated the effects of intensive policy actions on the economy. It showed that growth has lost momentum, with construction and real estate under pressure. Supply-side pressures are evidently weighing on activity. Some restrictions are easing such as in coal, however, which will be expected to support electricity production and usage while there is a little softening in credit availability. 

AUD/USD reaction

AUD/USD is slightly better off trading towards flat on the day and off the lows.

The price is on the verge of a critical test of the dynamic support following a touch of the 61.8% Fibonacci retracement level and a rejection at the 20-EMA. If the support breaks, the downside will be in play for the open this week. 

About Caixin PMI

The Caixin China Manufacturing PMI™, released by Markit Economics, is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private manufacturing sector companies.