Asian Session – Aussie falls as Chinese economy contracts
January 23, 2014 7:21 am
Manufacturing data from China this morning showed the first contraction in 6 months and prompted new concern about growth in the world’s second largest economy.
The HSBC flash manufacturing PMI fell to a 6-month low of 49.6 in January, below December’s final reading of 50.5 and missing expectations for a 50.3 reading.
The soft data put a damper on market sentiment today, resulting in safe haven demand. Meanwhile, the Australian dollar was impacted the most since China is a major trading partner for Australia.
The Aussie erased all gains made on Wednesday when it was lifted by Australian CPI data. The higher inflation rate decreased the chances of a rate cut by the Reserve Bank of Australia. However, the Chinese data today pushed the Australian currency back down towards yesterday’s lows, dipping to a low of 0.8786 after the PMI data. The Aussie lost 0.5% against the greenback to end the Asian session at 0.8805, down from the session open of 0.8848.
Despite a broadly stronger US dollar, the yen strengthened on safe haven flows after the disappointing China PMI data. The Japanese currency gained 0.18% to 104.32.
Focus will turn to the dollar later in the day as US jobless claims data are due for release. Expectations are for a decline from 3 million to 2.9 million in the week ending January 11.
Demand for the dollar is expected to remain quite strong as long as there are expectations for more Fed tapering.
In other currencies, the euro showed little movement, as is typical for the Asian session. The euro traded up 0.02% to 1.3549, though it remained in its recent 1.3500-1.3600 range that it has been trading since Monday. A major risk event for the euro will be today’s PMI data from the Eurozone.
Manufacturing data from China this morning showed the first contraction in 6 months and prompted new concern about growth in the world’s second largest economy.
The HSBC flash manufacturing PMI fell to a 6-month low of 49.6 in January, below December’s final reading of 50.5 and missing expectations for a 50.3 reading.
The soft data put a damper on market sentiment today, resulting in safe haven demand. Meanwhile, the Australian dollar was impacted the most since China is a major trading partner for Australia.
The Aussie erased all gains made on Wednesday when it was lifted by Australian CPI data. The higher inflation rate decreased the chances of a rate cut by the Reserve Bank of Australia. However, the Chinese data today pushed the Australian currency back down towards yesterday’s lows, dipping to a low of 0.8786 after the PMI data. The Aussie lost 0.5% against the greenback to end the Asian session at 0.8805, down from the session open of 0.8848.
Despite a broadly stronger US dollar, the yen strengthened on safe haven flows after the disappointing China PMI data. The Japanese currency gained 0.18% to 104.32.
Focus will turn to the dollar later in the day as US jobless claims data are due for release. Expectations are for a decline from 3 million to 2.9 million in the week ending January 11.
Demand for the dollar is expected to remain quite strong as long as there are expectations for more Fed tapering.
In other currencies, the euro showed little movement, as is typical for the Asian session. The euro traded up 0.02% to 1.3549, though it remained in its recent 1.3500-1.3600 range that it has been trading since Monday. A major risk event for the euro will be today’s PMI data from the Eurozone.
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