Australian Dollar Gained as Chinese Manufacturing Shows Improvement
THE TAKEWAY: China Manufacturing contracted at a slower rate > Marginal improvement might lead to economic strength for Australian economy > Australian Dollar gained
The Australian Dollar gained versus the U.S. Dollar as the China HSBC Flash Manufacturing PMI increased to 49.5 in June from 48.2 in May. Although the output index remained below the benchmark growth reading of 50, the move higher suggests that the manufacturing sector appeared to be contracting at a slower rate which can be interpreted as a positive signal for the Australian Currency. China is one of the largest consumers of Australian exports and an increase in Chinese production can translate to economic strength for the Aussie economy.
Moreover, the Australian Dollar was broadly sold over the last 24 hours of trading and it’s possible that markets decided to take profits on the improved news.
AUD/USD, 5 Minute Chart
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