China cut Reserve Requirement Ratio yesterday by 0.5%. This action was to enable commercial banks lend more money to support capital investment, increase liquidity as well as spending. This is an attempt to further devalue the Yuan at this time of economic downturn in China and towards diversification from manufacturing into a service and consumer economy.
Unfortunately, major economic data from China overnight all came below market expectations: Manufacturing pmi shows a downward revision from 49.4 to 49.0. Caixin Manufacturing pmi also dropped to 49.0 from 48.4, Non-Manufacturing pmi also falls to 52.7. In Japan, Manufacturing pmi also dropped to 50.1 from 50.2.
In Australia, The Reserve Bank of Australia left interest rate unchanged at 2%. The Governor however highlighted the focus will now be on the labour market due to the sudden jump in unemployment rate from 5.8% to 6% in January. He also mentioned the moderate growth of the housing market and the transition of the economy from mining. He however indicates possibility of rate cuts if consumer spending remains weak.
Later today, major economic data to watch include the German unemployment figure, UK manufacturing pmi, Canadian GDP, us Manufacturing pmi and ISM manufacturing pmi.
It is going to be a busy day! o