China factory data spurs demand for the AUD

Australian Dollar:

Making a notable move in an upward direction yesterday demand for the Australian dollar was bolstered after figures showed China’s factory sector expanded in June for the first time in six months. With the HSBC Flash PMI reading of 50.8 comfortably surpassing the forecasted result of 49.7, the improvement witnessed in June suggests that Beijing’s modest policy mix may finally be returning some dividends given their pledge to remain in an accommodative mood until the recovery is sustainable. Trading from an earlier low of 0.9368 when valued against its US Counterpart such lows were countered by highs of 0.9440. Stronger this morning at 0.9419 the next 24 hours will important to see whether fresh support can be grinded out up above the critical the 94 US Cents mark.  

• We expect a range today of 0.9380 – 0.9450

New Zealand Dollar:

Boosting sentiment surrounding the world’s second largest economy, the New Zealand dollar has managed to touch its highest level in two months when valued against its US Counterpart after manufacturing figures in China yesterday came in above forecast. Whilst rallying directly in line with the positive result from China the Kiwi has been sold off ever so slightly overnight opening 0.2 percent higher as it currently buys 87.08 US Cents. Looking ahead over the coming day’s direction for the Kiwi appears in the hands of offshore markets given the thin looking economic docket locally.     

• We expect a range today of 0.8670 – 0.8730

Great British Pound:

The Great British Pound has experienced a period of consolidation during the early parts of this week once again doing well to garnish some solid support up above the 1.7000 juncture when valued against its US Counterpart. In the only news which caught the attention of investors The Bank of England stated overnight that mortgage demand increased significantly last month in line with the availability of credit. Demonstrating just far property prices have come data last week showed UK prices rose by 9.9 percent on an annualised basis, rising by almost 20 percent in London. Whilst marginally stronger this morning at 1.7025 the Sterling is also weaker against the Aussie (1.8069) and the Kiwi (1.9535).

• We expect a range today of 1.8040 – 1.8100

Majors:

Optimism surrounding the global growth picture received a blow overnight that is despite solid manufacturing statistic’s from the US and China. Highlighting that bullish sentiments remain muted due to geopolitical tensions and the associated risks they poise Manufacturing PMI readings in Germany, France and the broader Euro zone all fell short of expectation putting further strain on an already fragile economic backdrop, a backdrop policy makers will need to support.  Whilst initially losing ground the euro has done well since managing to hover close to the 1.3600 mark when valued against its US Counterpart. In other currency moves overnight the US dollar traded in a relatively open range (101.808 – 102.125) when up against the Yen weaker this morning at 101.911.

Data releases

• AUD: No data today
• NZD: No data today
• JPY: No data today  
• GBP: Inflation Report Hearing  
• EUR: No data today
• USD: CB Consumer Confidence, New Home Sales