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Australian Dollar Gains On Local Retail Sales, China Caixin PMIs

Australian Dollar Gains On Local Retail Sales, China Caixin PMIs

David Cottle, Analyst

AUSTRALIAN DOLLAR, TRADE AND CHINA CAIXIN PMI TALKING POINTS:

  • Australian retail sales beat forecasts for May, if only just
  • The coutnry’s trade surplus came up short, however
  • AUS/USD traders accentuated the positives

Find out what retail foreign exchange traders make of the Australian Dollar’s chances right now at the DailyFX sentiment page.

The Australian Dollar got a boost Tuesday from upbeat economic data out of both Australia and China.

The latter’s June Caixin Purchasing Managers Index for the service sector came in at 53. 9, which was both a four-month high and well above the 52.7 print expected. Taken together with the manufacturing snapshot already released, the data made for a composite PMI of 53.0, which was also ahead of expectations. Any PMI reading above the 50 level speaks to expansion for the sector in question. The Caixin versions cover China’s smaller, private firms and act as a supplement to the official data series which focuses on larger, State owned concerns.

Overall, the June data series suggests that China is weathering current worries about trade with the US reasonably well, and is probably still on course to hit the admittedly modest growth targets set for it this year by Beijing.

Strong Data: Australian Dollar Vs US Dollar, 5-Minute Chart

AUD/USD rose slightly earlier too, despite news that its home nation’s trade surplus missed expectations in May. It came in at AUD827 million (USD613 million), well below the AUD1.2 billion forecast. However retail sales data released simultaneously showed a 0.4% on-month increase for May, just above the expected 0.3% rise. Consumers are in much focus in Australia, as they are chafing under the twin burdens of high debt and low wage increases. Signs that spending is holding up may have supported the currency.

On its broader, daily chart, AUD/USD remains very much in the long downtrend which has dominated trade all year. It seems to have settled into a fairly broad range in the last couple of weeks, but the yawning gulf in interest rate prognoses between a Federal Reserve still committed to policy tightening, and a Reserve Bank of Australia nowhere near anything of the sort seems likely to keep the Aussie under pressure.

Australian Dollar Vs US Dollar, Daily Chart

RESOURCES FOR TRADERS

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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