AUD/USD climbs above 0.6730 on better-than-anticipated China’s official PMI

The AUD/USD pair has jumped above 0.6730 as China’s National Bureau of Statistics (NBS) has reported better-than-projected PMI figures. Manufacturing PMI has landed at 51.9, higher than the consensus of 51.5 but lower than the former release of 52.6. The Non-Manufacturing PMI has mounted higher at 58.2 vs. the former release of 56.3.

Chinese economy looks steady on its way to economic recovery as the administration is providing various monetary and non-monetary measures to trigger overall demand and accelerate the scale of economic activities. However, Monday’s Caixin Manufacturing PMI data will be keenly watched. Investors should be aware of the fact that Australia is a leading trading partner of China and a higher scale of economic activities will support the Australian Dollar.

Going forward, the Australian Dollar will remain active ahead of the interest rate decision by the Reserve Bank of Australia (RBA).

Investors are split about the monetary policy decision by RBA Governor Philip Lowe as Australian inflation has softened to 6.8% firmly from the December print of 8.4%, which supports the case of keeping policy steady and observing the impact of the current interest rate. Also, RBA Lowe cited in its previous policy statement that the central bank is considering maintenance of the status quo in April. While, the other school of thought believes that despite softening of Australian inflation, the Consumer Price Index (CPI) is still far from the desired target. Therefore, the rate-hiking spell should continue ahead.

On the United States front, the US Dollar Index (DXY) is putting efforts into defending its critical support of 102.10. More action will be seen in the USD Index ahead of the release of the US core Personal Consumption Expenditure (PCE) Price Index data.