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China manufacturing PMI dips into contraction - key markets to watch out for

The data released in Asia showed China's factory activity contracted for the first time in 11 months. Worth noting is the fact that growth in new order books was also the slowest seen since the current upturn began in July 2016. 

Demand was relatively subdued both at home and overseas, with ‘new export sales rising at a similarly marginal pace’. The drop in the overseas demand is bad news for Germany and US markets. 

Key markets to watch out for- 

FTSE 100 - UK’s ‘mining-heavy’ FTSE 100 index posted an inverted bearish hammer candle on the daily chart on Wednesday. The miners - Anglo American, Antofagasta, and Glencore - could feel the heat of the contraction in the Chinese manufacturing activity. 

EUR/JPY - A potential risk-off in the European markets could strengthen the bid tone around the Japanese Yen. EUR/JPY could resume the retreat to a double top (125.80) neckline level of 122.55 levels. 

US 10-year treasury yield - Risk-off tone in the markets could yield a sell-off in the yield to 2.165% (April low). The weekly chart of the 10-year yield shows a falling top formation. 

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