AUD firms on strong Chinese Manufacturing data

Australian Dollar:

The Australian dollar spent the majority of Thursday’s Asian trade waiting on Chinese Flash manufacturing data to set the tone for the session. The Aussie began Thursday morning drifting downwards touching lows 21 points off the open in anticipation on the data from Australia’s biggest trading partner China. The release of data was for the 5th month below the 50.0 mark on the index which does suggest the manufacturing sector is contracting however the results were a 5 month high of 49.7. This reading is a strong figure after previous disappointing months and does show the industry is on track towards being considered in expansion. The numbers gave the Aussie a push upwards as the AUD jumped 30 points above the daily open to 0.9253. As the session continued the Australian dollar experienced further strength across the board continually climbing touching highs of 0.9271. Overnight the AUD momentum turned around and the Aussie crept downwards touching lows of 0.9213 against the US. Mixed results from US data did help the AUD tick upwards however these gains were quickly lost and the Aussie swaps hands with the US marginally weaker this morning at 0.9229. With very little data on offer today and overnight leading into the weekend investors will pay attention closely to the US session as New Home Sales could provide an interesting end to the week.

We expect a range today of 0.9180 – 0.9265

New Zealand Dollar:

The New Zealand dollar followed a similar trend to the Aussie on Thursday once again tracking in a comparable fashion against the Greenback. The Kiwi opened Thursday drifting downwards against the US touching lows of 0.8555 which was 22 points off the open as investors waited cautiously on Chinese Flash Manufacturing PMI. The data which has spent the last 5 months below the 50.0 mark on the index came in at 49.7 well ahead of the forecast of 48.4. This is a drastic improvement to previous months even though these figures still suggest the industry is contracting. Inflation expectations was the only data released in New Zealand on Thursday and these figures came in 0.1 per cent more than previous however had a muted affect due to the magnitude of the Chinese data. Overnight the higher yielding currency continued to trade under pressure however when mixed US figures were released the Kiwi saw some reprieve. The NZ dollar touched lows of 0.8552 and opens this morning 16 points higher at 0.8565 against the Greenback. Heading into the weekend there is no data locally for New Zealand however investors will watch the US market and the New Home Sales figures out overnight.

We expect a range today of 0.8515 – 0.8602

Great British Pound:

The British Pound had a relatively quiet Asian session against the US dollar on Thursday drifting away from highs made the night before to lows 16 points off the open at 1.6884. The Sterling only moved in a 16 point range for the most part of the day as investors waited on overnight UK data for direction. The lack of volatility was not the same against the higher yielding currencies as the GBP lost ground against both the Aussie and Kiwi when stronger than forecast Chinese Manufacturing data was released. The GBP lost 75 and 28 points against the AUD and NZD respectively and spent the rest of Asian trade continuing to drop off. Overnight investors watched closely for the revised GDP figures in the UK as no change was printed remaining at a growth of 0.8 per cent. Broad thinking was for a slightly reviewed uptick to the data and the Cable slid heavily touching lows of 1.6850, opening today at 1.6869 against the US dollar. The data conversely did not have a negative affect against the higher yielding Aussie and Kiwi dollars as the Sterling managed to gain back most of, if not all of the losses during Asian trade. Today we see the GBP open slightly stronger against the AUD at 1.8280 and marginally weaker against the NZ dollar at 1.9697. With no data in the UK being released tonight eyes will turn to the Eurozone and the US to give direction into the weekend.

We expect a range today of 1.8225 – 1.8330

Majors:

The Euro remained range bound on Thursday during Asian trade moving in a 17 point margin against the Greenback after a night where investors saw the US gain back some recent losses. The Euro touched highs of 1.3687 and lows of 1.3670 as focus turned to impending overnight data.

The US dollar experienced across the board strength on the back of a mixed bag of figures overnight released locally. The first release was not the strongest for the US dollar as the Labour department printed the amount of individuals claiming jobless benefits had risen to 326,000 by 28,000. Analysts had forecast for a much smaller increase in jobless claims after a previous month where reductions had been printed. On a more positive note for the US existing home sales although failing to reach expectations ticked up to 4.65 Million by 0.06 Million which was seen as a positive for the Greenback. The Flash Manufacturing data was reported growing at a faster rate than expected at 56.2, 0.60 ahead of forecast. The Euro lost ground against the US dollar on the back of these releases and opens at 1.3656 this morning.

The Euro and the US appear to be the only two major currencies with local data announcements leading into the weekend as investors will rely heavily on German Business Climate and New Home Sales out of the US for direction. Onlookers will also pay attention to European Parliamentary Elections.

Data releases:

AUD: No Data
NZD: No Data
JPY: No Data
GBP: No Data
EUR: German Final GDP q/q, German Ifo Business Climate, Italian Retail Sales m/m, European Parliamentary Elections, Belgian NBB Business Climate
USD: New Home Sales