Australian Dollar Higher as PMI Indicates China Growth Momentum

By Christopher Almeida 21 March 2013 02:33 GMT Created Using Marketscope 2.0

THE TAKEAWAY: The Australian Dollar rallied against its American counterpart, the U.S. Dollar as the HSBC Flash Manufacturing PMI beat analysts’ estimates of 50.8 and came in at 51.7.

Expectations had China’s HSBC Flash Manufacturing PMI at 50.8 ahead of the announcement as the Australian Dollar remained quiet. The eventual print of 51.7 sent the Australian dollar on a rally from 1.0374 before the release to 1.0385 just minutes after. A PMI reading of greater than 50 indicates that the relevant industry is in expansion.

After some relatively unimpressive factory output and retail sales numbers coming out of China, investors were concerned that a Chinese growth rebound was losing momentum, however the PMI value of 51.7 may reignite some confidence.

The Australian Dollar has seen a rally in early March as traders pared rate cuts bets on announcements made by the RBA that cuts in 2011 still have room to run. The so called “Aussie” rallied further on the Manufacturing PMI news as expansion for Australia’s largest trading partner is seen good news for the commodities based economy.

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21 March 2013 02:33 GMT

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Australian Dollar Higher as RBA Sees Domestic, China Improvement

By Christopher Almeida 19 March 2013 03:15 GMT Created Using Marketscope 2.0

THE TAKEAWAY: The Australian Dollar fell briefly then rallied as the Reserve Bank said there were signs that the economy was responding to the low interest rates.

The Reserve Bank of Australia released the minutes from its March meeting today and covered issues including the high Australian Dollar, restrained borrowing, the global outlook and Australia’s largest trading partner, China.

The so called ‘Aussie Dollar’ has seen a close to a 50 per cent appreciation over the last 4 years against the U.S. Dollar and despite seeing lower levels more recently, the RBA still maintained that the currency was at a high level. In terms of global economies, the RBA reported that the U.S. economy is experiencing moderate growth with continued improvement in the housing market, with China also seeing some sustainable growth pace. The Euro area remained an area where the Reserve Bank saw contractions in economies and Australian policy makers expected that economies affected by the sovereign debt issues would continue to see weakness. Domestically, the Bank saw that dwelling construction had picked up further in the December quarter and that although indicators of consumption were mixed; growth in that sector was still modest. Mining investment in Australian continued to be strong, but investment outside the sector was estimated to have declined with expectations that it would pick up into 2014.

The Australian Dollar fell sharply against the Greenback, then rallied on the release as investors reacted to the Bank’s view that the results of the series of rate cuts throughout 2011 still had further to run, as well as interest rate swaps pricing in only an 8 percent chance of a rate cut at the next central bank meeting.

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19 March 2013 03:15 GMT

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