It’s a busy day ahead, with manufacturing sector PMI figures in focus. Disappointing PMIs from China failed to weigh on risk sentiment, with optimism overshadowing weaker headline numbers.
Earlier in the Day:
It’s was a busy start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action this morning, with economic data from China also in focus.

For the Japanese Yen
The manufacturing sector was in focus early in the day.
In February, Japan’s Manufacturing PMI increased from 49.8 to 51.4, which was an upward revision from a prelim 50.6.

According to the February survey,

This was the strongest improvement in the health of the sector since Dec-2018.
Production volumes increased for the 1st time since Dec-2018.
Output saw a moderate expansion, supporting the uptick in the PMI.
Manufacturers reported that a gradual recovery in demand led to increased orders for manufactured goods.
New orders expanded for the second month in a row, with the pace of growth the quickest since Oct-2018.
Also, new export orders increased for the first time in 4-months in February, supported by strong demand from China in particular.
Employment levels continued to fall, however, though the pace of decline was softer than in recent months.
Cost burdens rose for a 9th consecutive month, with the rate of input cost inflation accelerating at the fastest pace in 2-years.
Optimism across the sector strengthened to the highest since Jul-2017, supported by hopes of an end to the pandemic.
The Japanese Yen moved from ¥106.491 to ¥106.500 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.06% to ¥106.63 against the U.S Dollar.

For the Aussie Dollar
In February, the AIG Manufacturing Index rose from 55.3 to 58.8, the highest level since Mar-2018.

According to the February survey,

Five of the six manufacturing sectors reported positive trading conditions in February.
The building materials sector recorded its first month of expansion since Aug-2019, supported by government fiscal stimulus.
Only the metal products sector continued to report mildly negative conditions in February.
According to the ABS, company gross operating profits slid by 6.6%, quarter-on-quarter, reversing a 3.2% increase in Q3. Economists had forecast a 4.0% decline.

The Aussie Dollar moved from $0.77501 to $0.77527 upon release of the figures that preceded China’s Manufacturing PMI numbers. At the time of writing, the Aussie Dollar was up by 0.57% to $0.7750.

From China
In February, the Caixin Manufacturing PMI fell from 51.5 to 50.9. Economists had forecast for the PMI to hold steady at 51.5.

According to the February survey,

Companies reported slower rises in both output and new work for a 3rd consecutive month.
Firms noted that the COVID-19 pandemic had weighed on demand and impacted business operations.
New export work fell for a second consecutive month.
Total new work expanded at the weakest pace for 9-months, with new export orders falling for a 2nd consecutive month.
Rising prices for raw materials and higher transport costs led to a further marked increase in input costs.
Factory gate prices rose solidly, as firms looked to partially pass on higher cost burdens to customers.
In spite of this, companies were strongly optimistic that output will rise over the next year on hopes of a global economic rebound.
The Aussie Dollar moved from $0.77570 to $0.77493 upon release of the figures.

Elsewhere
At the time of writing, the Kiwi Dollar was up by 0.58% to $0.7275.
The Day Ahead:
For the EUR
It’s a busy day ahead on the economic calendar. Manufacturing PMI figures for Italy and Spain are due out later this morning, along with finalized numbers for France, Germany, and the Eurozone.

Barring marked revisions to French and German PMI numbers, Italy and the Eurozone’s PMIs will likely have the greatest impact.

Prelim February inflation figures from Italy and Germany will also draw attention as reinflationary fears linger.

At the time of writing, the EUR was up by 0.07% to $1.2083.

For the Pound
It’s a relatively quiet day ahead on the economic calendar. Finalized manufacturing PMI figures for February are due out later today.

Barring a material shift from prelim figures, however, the PMI should have a relatively muted impact on the Pound.

With economic data on the lighter side, the Pound will be in the hands of market risk sentiment on the day.

We continue to see the downside limited, however, with plans to ease lockdown measures positive.

At the time of writing, the Pound was up by 0.37% to $1.3984.

Across the Pond
It’s a relatively busy day ahead on the economic calendar. February’s ISM Manufacturing PMI numbers are due out later today along with finalized Market manufacturing PMI figures.

Expect the ISM numbers to draw the greatest interest.

Away from the economic calendar, chatter from Capitol Hill will also influence. From the weekend, the House of Representatives passed Biden’s $1.9 trillion relief package through to leave it in the hands of the Senate.

The key date for Biden and for the Democrats is 14th March, when existing unemployment benefits expire.

On the geopolitical risk front, there is also Iran in focus.

At the time of writing, the Dollar Spot Index was down by 0.10% to 90.7900.

For the Loonie
It’s a quiet day ahead, with no material stats to provide the Loonie with direction.

The lack of stats will leave manufacturing PMI figures from China and the U.S and market risk sentiment to provide direction.

At the time of writing, the Loonie was down by 0.27% to C$1.2703 against the U.S Dollar.

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