Sunday April 10, 2016 - 13:10:14 GMT
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Global Economy Stirring? Using Manufacturing PMIs For Trading
Fundamentals for Trading. EXCLUSIVE CHARTs:
Latest Manufacturing PMI. The Smoothed (3mo Averages) Manufacturing PMIs have been turning south. No wonder key central banks have been fretting. The Fed's policy "nomalization" was recently put on hold due to concerns about global growth. On the other hand, the U.S. PMI recently has been turning up. Thiis upswing has started to appear in government statistics as well. Keep in mind, PMI readings are not "hard" economic statistics. Also keep in mind that while the economy might be improving, the absolute level of growth has been quite modest.
I tend to focus mucjh more on the manufacturing PMI series, even in Service economies, because it is more sensitive to changes in the buisness cycle. Forex markets tend to be very sensitive to changes in relative growth and to swuings in short-term nterest rates.
EXCLUSIVE CHART: Commodity currencies (plus China).
Unlike the major economy PMIs, the smoothed moving averages have been turning higher. The recent recovery in the AUD was presaged in its PMI. China continues to run about flat. The bottoming of crude prices appears to be helpng the U.S. and Canadian PMIs. This chart might be signaling the early days of a global economic recovery. Keep a close eye on oil and commodity prices.
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