Talking Points
- Private service sector activity ticked up in November, according to Caixin
- Taken with a manufacturing deceleration, the overall picture hasn’t changed much
- Neither did AUD/USD, which was more focused elsewhere
The Australian Dollar was steady on Monday after news of a pickup in Chinese service-sector output was published.
The private Caixin Purchasing Managers Index (PMI) for the sector came in at 53.1 in November, up from 52.4 the month before. This result contrasts slightly with the modest decceleration seen in the Caixin manufacturing survey, released last week. In the logic of PMIs 50 is the magic level which seperates expansion from contraction.
The composite Caixin PMI for November was thus unchanged on October’s showing at 52.9. There was also some good news for Beijing in the survey breakdown, with the sharpest increase in total business input costs and output charges since early 2011. This suggests that the authorities’ often-strenuous efforts to combat deflationary pressures are bearing some fruit.
The PMI data passed markets by however. Early Asian focus has been squarely on the defeat and resignation of Italian Prime Minister Matteo Renzi in a constitutional referendum on Sunday and what this might mean for Italy’s economic reform as well as its place in the Eurozone.
The China numbers weren’t dramatic enough to tear attention away from that live issue.
The Australian Dollar can function as the markets’ favourite liquid China proxy bet, but didn’t do so to any very clear extent after the PMI numbers. AUD/USD was at 0.74250 right after the release, from 0.74340 just before.
Steady for now: AUD/USD
Chart compiled using TradingView
Check out the DailyFX Analysts' 4Q forecasts for Dollar, Euro, Pound, Equities and Gold in the DailyFX Trading Guides page.
--- Written by David Cottle, DailyFX Research
