Tomorrow, we will get the PMIs of major economies from around the world. China is likely to dominate the spotlight, with preliminary figures for Europe, US, and UK already released last week. PMIs give an advance look at the state of the economy. China could have them especially useful.
The reason that Chinese figures could be extra important is because this corresponds to the first month of full post-covid opening that didn’t include a major holiday. The expectation is that these results could set the tone for the Chinese economy – and by extension, many of the commodity currencies – for the rest of the quarter.
What are we looking for?
Focus is likely to be around China’s domestic economy. It’s been battered by the effects of covid lockdowns and a deteriorating real estate sector. This is crucial for commodity currencies as the biggest consumer of raw materials is the building industry. The Chinese government has implemented a large monetary easing program to prop up the domestic economy.
The rest is facing rising inflation. This has led to tighter monetary policy. It is expected that this will impact on economic growth. China…