May 5: Asian session
Asian markets took a turn lower on Monday as the HSBC survey showed China manufacturing fell for a 4th month in a row. The final reading for the HSBC Manufacturing PMI fell to 48.1 in April vs. expected 48.4 (reading below 50 indicates contraction). Markets are now concerned that the second largest world economy is losing momentum. The risk sentiment was generally positive before the China figure came out: investors were inspired by the Friday’s US labor report (+288K vs. 216K expected). The increased tensions in Ukraine keep gold and bonds well bid. Japan, South Korea and Thailand markets are closed for a holiday today.
USD/JPY hit a two-week low of 101.85 as demand for the safe currencies increased. The pair lost more than 100 pips from the Friday’s peak of 103.02 hit on the strong US labor report.
Demand for the commodity currencies is subdued. AUD/USD opened the week with a bullish gap at $0.9285, dipped to $0.9250 later in the session and now recovered to $0.9275. Australia building approvals fell by 3.5% in March. Reserve Bank of Australia holds a policy meeting tomorrow. NZD/USD is trading under pressure around $0.8250. Gold opened with a gap up and hit to $1309.4 in Asia (highest since April 15).
EUR/USD consolidates in the $1.3885/65 range after a volatile Friday, while GBP/USD hovers in the $1.6885/68 band. UK markets are also closed.