THE TAKEAWAY: Chinese manufacturing gained pace > Strong PMI hints of improved conditions yet may not gain traction, Aussie exporters likely to struggle > AUDUSD bought
The Australian Dollar nudged higher versus the greenback as Chinese manufacturing gained pace in November as measured by an uptick in the recent PMI figure print at 50.4 where a reading above 50 indicates accelerating activity.
The positive print comes at a time when Australian mining exporters have come under pressure as Chinese demand has recently waned largely due to strong European headwinds. China has been the main engine driving Australian exports and the November print could be a sign of strength to come, however it’s unclear whether activity will continue to gain pace.
Currently the Forex market appears to have priced in a 61 percent probability the RBA will reduce rates by 25 basis points on December 4, hinting FX traders’ expectations that economic conditions will deteriorate and result in a more dovish lean by policy officials. A rate cut would surely reduce the high-yielders’ attractiveness and likely weigh heavily on Aussie longs.
AUD/USD, 1 Minute Chart