Omicron Outbreak Cripples China's Services Sector

Spot USD/CNH jumped after the release of worrying results of a private PMI survey, which reflected the blow to the local services sector delivered by restrictions on activity amid the outbreak of Omicron. The rate lodged a session high of CNH6.3871 before pulling back from there and last changes hands at CNH6.3808, up 33 pips on the day.

• The results of the latest Caixin PMI survey painted a bleak picture of the condition of China's services sector amid the spreading outbreak of Omicron coronavirus variant. Services PMI plunged to 42.0 in March from 50.2 prior, printing well below the consensus forecast of 49.7. Accompanying commentary from Caixin noted that business optimism about bringing the Covid-19 epidemic under control has faded, with a gauge of planned future activity tumbling to a 19-month low.
• Meanwhile, Shanghai authorities are mandating another round of mass testing and have announced that the city will remain locked down during the fresh testing drive.
• As a reminder, China returns from a holiday-elongated weekend today.
• From a technical perspective, topside focus falls on CNH6.3983, the high print of Mar 28. Above there would expose the 200-DMA, which kicks in at CNH6.4059. Conversely, bears would be pleased by a pullback under Mar 31 low of CNH6.3452.