Forex Marketz Daily Forex News – Fully Markets Update
This morning Australian dollar (AUD/USD) traders were treated to Chinese Caixin manufacturing purchasing managers’ index (PMI) data. The Australian dollar extended gains on the Chinese PMI data which beat expectations.
The private Caixin manufacturing PMI printed with rising to 51.1 for the month of July. This is up from the print of 50.4 in June. This is the PMI’s second consecutive month of expansion in the manufacturing sector. It is also the Caixin PMI data’s fastest pace of growth since March.
After the release, Chinese equities markets were mixed as Hong Kong shares traded higher but the mainland markets came off their session highs to close mildly higher. The Australian dollar got the biggest boost on the news.
The Australian Dollar Rises n Chinese Data and Bonds
The Aussie dollar continued to move higher alongside front end Australian government bond yields following the PMI data. This implies that the markets read the PMI print as supportive of a more hawkish Reserve Bank of Australia (RBA) policy stance. This RBA policy stance also reflects China’s role as Australia’s largest regional trading partner. China accounts for about 33 percent of all Australian exports. The majority of this trade is based in raw materials, or manufacturing, such as coal and iron ore.
The PMI data comes about three hours before today’s Reserve Bank of Australia’s policy meeting. No change is expected in monetary policy or their official cash rate. This will put the spotlight on the accompanying statement for guidance. RBA Governor Philip Lowe and his policy advisors will steer the central bank’s monetary policy in the months ahead.
