On Tuesday, the National Statistic Bureau of China published the non – manufacturer PMI index data. It can be seen that the data was slipped from 53.3 to become 47.5 in August. 

That number is lower than the decline expectation of 51.9. Because it has been under the level of 50.0, the China’s service PMI numbers this time have been passing through the construction zone. 

Historically, the China's service sector's achievements have also touched their lowest level since February 2020. That is actually the period of the start of a national lockdown.

The aim is to address the initial spread of COVID-19. The index's slump was largely triggered by the worsening optimism of business people in the services and construction sectors.

The Manufacturer is still on the Expansion Zone

In a separated release, the China’s PMI manufacturer data declined from 50.4 to become 50.1 on August. That is the sign that the manufacturer data is still on the expansion path. 

Although still on an expansion path, china's slowdown in manufacturing activity has continued to show an alarming trend in recent months; That is also highlighted by the participants. 

This is confirmed from the index's increasingly hit moving average. In line with the service index, the manufacturer data decline in that country thus time is also the lowest one. 

It is especially since the February 2020 perior. In that time, the China’s PMI index manufacturer slipped to the lowest level ever in 35.7 which was quite surprising. 

What are the Causes? 

That decline cannot be separated from the several factors. Those are ranging from the expensive raw materials price, the supply chain bottleneck caused by the extreme weather. 

The low demand because of The coronavirus spread, especially the delta variant lately, also has an impact. In response, most economists have cut china's economic growth forecasts for the third quarter.

Some important fundamental data releases such as retail sales, investment, and industrial output missed expectations. The spread of the delta variant globally and domestically is the cause. 

It has a major impact on China's economic activity which has been dependent on the consumption and export sectors. That is why; that must be fixed as soon as possible. 

Meanwhile, the USD is in the Lowest Level

Elsewhere, the index of US dollar or the DXY is hard to move from its lowest record for ten days. When this news was written, the USD was still locked in the level of 92.67.

Greenback is underpressured against several major currency pairs while it is waiting for the next market catalyst. The greenback's appeal has faded since the Fed Chairman Jerome Powell's speech.

That was stated at the Jackson Hole symposium last week. Powell confirmed the market expectations of an announcement and the start of a tapering in the year.

However, he was also stated that the central bank had set the tighter conditions for plans for an upcoming rate hike. Thus, tapering should not be interpreted as a signal of a rate hike.

The Powell Statement and its Effect

The statement made by Powell has an effect to the market mind. The speculations widely spread before said that the Fed’s interest rate will be done straightly after the tapering. 

However, Powell hinted that it would not necessarily raise the interest rates as soon as the tapering ended next year. The market participants reacted negatively to Powell's speech.

It is resulting in the U.S. dollar falling against its rivals. They avoid the hawkish surprise in the Jackson hole. In a short term period, more pressures downward may be happened. 

That can be happened on dollar, but the more interesting thing is the further economy datas ahead. The NFP data on August wiIl be the next focused owned by the participants.