AUD/USD Dips Despite Chinese Manufacturing PMI Increase

FX Strategy Articles > FX Trading Tips

Official Chinese figures and data from HSBC showed a slight increase in the country's Manufacturing Purchasing Managers' Index (PMI) in March. According to official figures from the China Federation of Logistics and Purchasing, the PMI rose from the previous 50.1 to 50.9. Meanwhile, HSBC reported a rise from 50.4 to 51.6. Both, however, missed initial estimates of 51.2 for the official data and 51.5 for HSBC.

According to HSBC's press release:

"After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™)... posted 51.6 in March, up from 50.4 in February, signaling a modest improvement. Operating conditions in the Chinese manufacturing sector have now improved for five consecutive months."

AUD Drops Vs. Majors

The numbers indicate China's continued month-on-month growth and provide suggestions on further growth throughout the year. This would normally be positive data for economies and currencies closely tied with China, but today's AUD/USD performance was an exception. Traders rather focused on the missed estimates and decided to sell AUDs, dropping the Aussie to the 1.03 mark against the USD. It also fared poorly against the JPY, going on a two-week low of 97.69. In contrast, the AUD/JPY pair rose to a four-day high of 98.28 just recently. Other currencies where it fell against were the CAD, NZD, and EUR, dropping to 1.0575, 1.2441, and 1.2317 as of current reports.

A Positive Outlook for China, Australia

This is likely a temporary setback for the Aussie, however. Last month, China saw a decline on its imports, negatively affecting the AUD. But with the current increase in the Manufacturing PMI and a rosy outlook for the Chinese economy towards the latter part of the year, Australia would certainly be able to bounce back. In addition, the AUD could be expected to rise further, unless the Reserve Bank finally decides to step in to help curb the strong Aussie.

By FX Strategy Team, Published on 1st of April 2013
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