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April 30, 2019
AUD / USD weakened as the Australian Dollar was negatively affected by the recent poor Chinese PMI report, regarding the conditions of manufacturing and non-manufacturing industries. The Australian dollar ended its rebounding effort, after the publication of Purchasing Managers' Index (PMI) data for China's manufacturing and non-manufacturing sectors.
When the news was written at the beginning of the European session, AUD / USD had slipped around 0.2 percent to around 0.7045. The AUD / NZD currency pair also slipped 0.12 percent to 1.060 levels.
The government version of China's Manufacturing PMI data for April 2019 has declined from 50.5 to 50.1. China's Non-manufacturing PMI also fell from 54.8 to 54.3 in the same period. Meanwhile, the Caixin version of the PMI report which focuses on small and medium manufacturing companies suffered a further decline from 50.8 to 50.2.
Overall, the Chinese PMI data this time compact missed expectations. Market optimism regarding China's economic outlook had risen after the release of GDP and corporate profits some time ago, but has now receded. In order to overcome the signal of an economic slowdown that is still continuing, Beijing is expected to continue to maintain economic stimulus.
In this context, the Australian Dollar was negatively affected, because of the vitality of China's industrial demand as one of the main source of orders for the export commodities of Kangaroo. However, the factor that is weighing on the Aussie is not only this.
David Cottle from DailyFX notes, "In the Daily chart, AUD / USD has returned fully into a downtrend that has persisted for most of 2018 because US interest rates have risen and Australian interest rates have stalled at a record low of 1.50 percent. Indeed investors have changed since taking into account the more cautious attitude of the US Federal Reserve, however, (the caution) of the Fed also applies to the Reserve Bank of Australia (RBA), and even though US interest rates currently seem to remain, Australia's interest rate futures curve now fully calculates at least one cut. "
The Australian, Canadian and New Zealand dollars experienced strength after the release of China's first quarter / 2019 GDP data which outperformed expectations. Various commodity currencies strengthened at the beginning of the session, due to the release of China's Gross Domestic Product (GDP) data which outperformed expectations.
The Australian dollar rocketed rapidly around 0.4 percent to reach the level of 0.7205 against the US Dollar; record high since the end of February. USD / CAD fell 0.2 percent to around 1.3325. The GDP data also helped the NZD / USD currency pair to overcome the slump suffered after the release of the New Zealand CPI.
The Chinese government report shows GDP growth as high as 1.4 percent (Quarter-over-Quarter) in the first quarter of this year, or 6.4 percent (Year-on-Year). The record is better than consensus estimates which estimate the annual GDP rate to only reach 6.3 percent.
China's industrial production data is also rumored to have gained 8.5 percent (Year-on-Year) in March, versus expectations of 5.6 percent. The prospect of an economic recovery in the world's largest commodity consumer country spontaneously increases the value of comdoll and other higher risk assets.
New Zealand, Australia and Canada are export-rich natural resource countries. Its growth can slow down, if the prospects for China's economic growth are sluggish, resulting in reduced demand for their commodities. On the contrary, economic improvement in the country of Panda has the potential to boost commodity demand as well, so that the growth outlook becomes more optimistic.
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