Weekend: Australian Dollar Rallies on 12-month Chinese Manufacturing Record
- Chinese official manufacturing PMI (MAR) reported at 53.1, expected 50.8, previous 51.0
- Chinese official PMI at highest point since March 2011 report of 53.4
- European leads support additional IMF backing of bailout fund
Chinese official PMI data reported over the weekend is seen to drive foreign exchange markets in low-liquidity pre-Asian market trading. Official manufacturing PMI for March, one of the primary gauges of the health of the manufacturing sector, was reported at 53.1, above the previous near-stalling 51.0 and against an analyst consensus of 50.8. Although HSBC’s own index showed a reading of 48.3 versus the previous 49.6, markets are interpreting the data as an indication that the world’s second largest economy will avoid a hard default. A PMI reading above 50 indicates that the sector is growing, and a reading of under 50 means the sector is shrinking.
The Australian and New Zealand dollars are leading commodity currencies higher in early trading on hopes that a robust Chinese economy will preserve the demand of raw materials from those two countries. Investors are returning to those higher yielding currencies as more good data from China and the United States may show that the world economy may be on the first legs to a sustained recovery. With additional Asian data out later this week, including Japanese industrial BoJ-Tankan surveys and the RBA’s rate announcement, the scope for further easing from the RBA and RBNZ may be limited.
At the time of writing, the Australian and New Zealand dollars were higher against the US dollar around 0.900% and 0.500% respectively, with lower yielding European currencies rounding out the bottom and the Japanese yen continuing its decline, hovering around the 83.000 level.
--By David Liu, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.