PMIs Disappoint, But Limited Market Impact

China official PMIs came in well below market expectations. The manufacturing printed at 48.0, versus a 49.0 forecast, while non-manufacturing PMI fell to 46.7, against the 48.0 forecast. Both series are above their trough points from earlier in the year, around the Shanghai lock down, but continue to trend down.

• Both series suggest the economy lost further momentum mid-way through Q4. The detail in both surveys was fairly negative across the board, with new orders for both PMIs not suggesting an imminent turnaround.
• As we noted yesterday though, a weaker economic back drop is well known for China at the moment.
• Perhaps reflecting this, and also re-opening/less stringent Covid restrictions hopes, the market reaction has been limited to the misses. USD/CNH popped above 7.1600 shortly after the data printed, but is now back around 7.1400 unchanged for the session.
• AUD/USD and NZD/USD have generally pushed higher as well, now that the dust has settled post the prints.
• One school of thought in the market may well be that the bleaker the economic data is the greater the likelihood the authorities will move away from stringent lock down conditions.