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Australian Dollar Jumps as China PMI Data Tops Expectations

Australian Dollar Jumps as China PMI Data Tops Expectations

Ilya Spivak, Head Strategist, APAC

CHINA PMI, AUSTRALIAN DOLLAR, ASX 200 - TALKING POINTS:

  • Australian Dollar, ASX 200 add to gains on upbeat China PMI data
  • Manufacturing-sector growth registers at the strongest in 20 months
  • Follow-through might be tepid as markets brace for US jobs report

Where will markets end 2019? See our Q4 forecasts for currencies, commodities and stock indexes!

The Australian Dollar jumped higher alongside the local ASX 200 stocks index as Caixin PMI data put Chinese manufacturing growth at a 20-month high. The index rose to 51.7 in October from 51.4 in the prior month, marking the fourth consecutive acceleration. Economists were penciling in a slowdown to 51.0 ahead of the release.

The rise added to gains already underway at the start of Friday’s trading session. The move higher is probably corrective following losses yesterday as worries about absent progress on US-China trade negotiations resurfaced. The East Asian giant is Australia’s largest trading partner, making economic conditions there a critical input for its own economic fortunes and that of its headline assets.

Australian Dollar vs US Dollar price chart - 5min

5min AUD/USD chart created with TradingView

The report revealed that new orders grew at the fastest pace since January 2013, supported by a pickup in export demand. Business confidence among the respondents polled about their outlook for the coming 12 months rose to the highest since April. Nevertheless, the survey cautioned that sentimentremained subdued in the context of historical data.”

Encouraging though that is – especially in the context of ongoing trade war – immediate follow-through might prove to be lackluster. Traders may be reluctant to commit one way or another as they await the release of October’s US labor market statistics. A steep drop in job creation is expected alongside a rise in the unemployment rate. That may cool any nascent optimism about an upturn in global growth.

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

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