The aussie dollar was propelled higher by encouraging Chinese manufacturing data, sending AUDUSD momentarily through 1.0400. Earlier, a lift in the euro was underpinned by short covering against USD. On the whole, it was a fairly quiet session as investors prepared themselves for thin trading conditions overnight due to the thanksgiving holiday in the US, and a lack of major economic news also kept a few investors on the sidelines.
More positive data from China’s manufacturing sector
The big release of the session was China’s HSBC flash manufacturing PMI data, which printed in expansion territory for the first time this year. The headline figure was 50.4, compared with 49.5 for October’s final figure. The market, however, is taking the figure with a grain of salt, as it is only a flash number and needs to be backed up by the official figure on December 1st and HSBC’s final reading on December 6th. All indications are that China’s official PMI figure will show expansion in the manufacturing for a second month in a row.
Nonetheless, today data adds to the case for a rebound in China’s growth in the second half of this quarter, or at very least an end to the growth slowdown. Prior manufacturing data, as well as industrial production and export figures, provide more evidence of renewed optimism within China.
AUDUSD was lifted around 20 pips immediately following the release of the Chinese figures, despite the fact that the data makes it less likely the new government is going to enact more stimulus measures. Yet, given the rebound in key areas of China’s economy, large amounts of more stimuli may not be needed in the eyes of the market.
EUR benefits from short covering
Early on in Asian trade, EURUSD pushed through 1.2860 as investors covered themselves after going short following the inability of eurozone finance ministers to agree on Greece’s bailout terms.
PMI data and an EU summit in focus tonight
Focus tonight is going to be on a slew of PMI data out of Europe, as well as an EU summit. In contrast to China’s PMI data, no one is looking for an expansion print from any eurozone nations. Furthermore, the inability of EU members to agree on much smaller expenses doesn’t bode well for this week’s meeting, at which leaders are supposed to address the region’s EUR1 trillion long-term budget.
EURUSD – hourly