The Australian dollar was briefly propelled higher by an unexpected increase in activity in China’s private manufacturing sector. HSBC’s reading of China’s flash September Manufacturing PMI jumped to 50.5, up from last month’s final reading of 50.2 and better than an expected fall to 50.0. The figures are mildly encouraging because they point to stabilisation in China’s manufacturing sector.
The slightly positive surprise was enough to propel AUDUSD up to a resistance zone around 0.8900, but the pair failed to break through this level. This isn’t surprising given that today’s report will likely be drowned out by fears about China’s growth story.
The biggest threat comes from China’s overheated property market. In fact, partly in response to falling property prices and lacklustre economic data Beijing eased policy twice last week in a bid to spur credit. The first was the PBoC’s decision to inject around 500bn yuan into the banking system, before the bank also cut the 14-day repo rate by 20bps to 3.5%.
These moves from the PBoC come on the bank of increased concern about the ability of the world’s second largest economy to reach its 7.5% growth target for the year. Many banks have cut their growth forecasts to below this level in recent weeks and even some officials in Beijing have suggested that growth slightly the government official forecast would be acceptable.
The Aussie
Overnight, the aussie was hit by a wave of sellers as iron ore prices drop through an important psychological barrier around $US80 a ton. There isn’t much potential headline making economic data out of Australia this week, but RBA Governor Stevens is speaking at 1230AEST on Thursday. In any event, the market will likely be focused on the US for a slew of Fed speakers and economic data.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.