Good day traders!
One of the fundamental news that I closely watch is the Purchasing Manager’s Index or PMI. Last time PMI were on the 22 Mac and it took the precious metal to the floor.
What is PMI actually?
The PMI is a composite index of the manufacturing situation that includes; new orders, production level, employment, supplier delivery times, and inventories. Data for this index, which is essentially a sentiment indicator for the national manufacturing sector, are obtained through surveys of purchasing managers. Like the Durable Goods Reports and the Industrial Production Report, PMI releases are important to the foreign exchange and metals (gold and silver in this case) because they provide a good measure of the manufacturing sector, which is an integral component of the economy, whether it is the US, the Euro, the German or even China.
So, first off you need to know where you can get the data. As a trader, many would prefer to read it at forexfactory.com. It’s a primary source for fundamental analysis. And have I told you that you’re going to see one tommorow?
On the other hand, you can also read it directly from markiteconomics.com. You can read all the PMI details here.
Now you know where to find it. Next is how to read it. Isn’t that important too? OK. So let’s say we scroll down and click at China: HSBC China Manufacturing PMI dated 1st April 2012. You will eventually download a PDF copy of it.
According to this PMI release, China PMI is at 48.3, down from 49.6, in which it means the economy is contracting. And for China alone, it means five consecutive month to month deterioration in manufacturing operating conditions. And it doesn’t look good.
To make matter even worse, US’s PMI looks good, at least it hold above the 50.0 level which eventually means the economy is expand.
So bad data for China and relatively good for US. In terms of gold index, more sellers to be seen with no fresh new orders and also a stronger USD is expected. I wonder which support could hold the price?