Australian Dollar Outlook - 23 August 2013
Bell FX Currency Outlook: The Australian Dollar has been boosted by yesterday's stronger-than-expected Chinese manufacturing data.
Australia: The AUD was languishing below 0.8950 and then received a boost by a better-than-expected result in the HSBC Flash China Manufacturing Purchasing Managers' Index, which came in at a 4-month high. HSBC's PMI for China's manufacturing sector jumped to 50.1 in August, up from July's 11-month low of 47.7.
Data demonstrating stabilisation in Chinese growth do have a habit of bolstering commodity prices and the AUD given our trading links to China. Further data is suggesting China's growth has stabilised at ~ 7.5% which is the target the Chinese administration have outlined.
This set the scene for better than expected PMI data out of the Eurozone, and though France disappointed, German and the broader Eurozone PMIs all exceeded expectations and improved quite significantly on the final July readings.
Yesterday's China data helped commodity prices with copper leading the way. The AUD has benefitted as written, though it did spend some time below 0.9000 in Europe. The AUD is the second best performing G10 currency over the past 24 hours (surpassed only by the SEK) and seems set to trade tightly into the weekend.
There is nothing of note due for release during the Asia-Pacific time zone for Australia, New Zealand or Japan.
Majors. In currency markets, the EUR was volatile, falling to around 1.3300 as US Treasury yields again edged higher, before rising back above 1.3370 as German PMI data signalled a basing in activity.
Elsewhere, USD/JPY was higher on the run up in yields. Overall, the stress in Asian financial markets has lowered in the past 24 hours with the INR and IDR both losing momentum, and while higher US Treasuries yields will pressure these markets today, their turn late in last night's US session is encouraging.
How this plays out in broader FX markets remains unclear. Overseas, Fed Chairman Bernanke won't be at this weekend's
Jackson Hole symposium, leaving his deputy Janet Yellen to take the reins.
The symposium has in past years been the place where strong clues as to the future of Fed policy has been revealed. However, this year, it looks to be a low key affair with a more international feel, with the event titled "Global Dimensions of Unconventional Monetary Policy".
There will be speeches from BOJ Governor Kuroda and Bank of Mexico Governor Carstens. ECB President Draghi and BOE Governor Carney will not be attending.
Economic Calendar
23 AUG GE GDP SA QoQ
UK GDP QoQ/YoY
EC Consumer Confidence Aug
US New Home Sales/MoM Jul
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