News Column

Aussie Slides As China Manufacturing PMI Declines

August 20, 2014



CANBERA (Alliance News) - The Australian dollar weakened against the other major currencies in the Asian session on Thursday after data showed that China manufacturing activity expanded less-than-expected in August.

Data from HSBC and Markit Economics showed that the manufacturing sector in China continued to expand in August - with a score of 50.3. That was well shy of forecasts for a score of 51.5 and down sharply from 51.7 in July. A score above 50 means expansion in a sector, while a reading below 50 signals contraction.

Data from the the Conference Board showed that the Australian economy is on pace to continue its modest recovery. The leading economic index was up 0.4% in the month of June. That follows the 0.2% increase in May and the 0.1% decline in April.

The Australian dollar fell to a to 2-1/2-month low of 0.9236 against the US dollar, from an early high of 0.9290. If the aussie extends its downtrend, it is likely to find support around the 0.91 area.

Against the Canadian dollar, the aussie slipped to a 3-day low of 1.0142 from an early high of 1.0193. The aussie may test support near the 1.00 region.

The aussie edged down to 96.00 against the yen from an early high of 96.37. On the downside, 95.10 is seen as next support level for the aussie.

Data from Markit Economics showed that the manufacturing sector in Japan continued to expand at an accelerating pace in August - with a score of 52.4. That handily beat forecasts for a score of 51.5 following the 50.5 reading in July.

Pulling away from an early high of 1.4269 against the euro, the aussie fell to 1.4337. Continuation of bearish trend may lead the aussie to a support around the 1.44 mark.

The aussie, which closed yesterday's deals at 1.1084 against the NZ dollar, edged down to 1.1057. This may be compared to an early multi-month high of 1.1101 against the kiwi. If the aussie continues to slide, it may find support around the 1.09 area.

Data from the Statistics New Zealand showed that the number of visitor arrivals in New Zealand topped 196,900 in July- a record for the month of July. In the year to July, visitor arrivals numbered 2.80 million, up 6% on year.

Looking ahead, PMIs from major European economies for August are due to be released in the European session.

In the New york session, US weekly jobless claims for the week ended August 16, Markit's US manufacturing PMI for August, existing home sales and leading indicators for July and Eurozone consumer sentiment index for August are due to be released.



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Source: Alliance News


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