The Australian Dollar Moves Higher after RBA Decision and Chinese Data

The Australian Dollar, more specifically the AUD/USD Forex market moved higher after the world’s second largest economy released a whole slew of economic data. China released some robust data but the markets shrugged it off. Please refer to the below daily  chart.

The official purchasing managers index (PMI) for the manufacturing sector came in ahead of expectations at 51.2. Analysts expected a print of 50.4 for September. This index covers large, state owned corporations, but there was equally good news with the Caixin manufacturing PMI which covers smaller firms. This index came in at 51.2, the best expansion rate since July 2014. Analysts expected a print of 50.1.

Completing today’s round of robust Chinese data was the official non-manufacturing PMI. This number came in at 54, which was up from 53.7 in September.

This data, as well as other recent data releases, does suggest some degree of stabilization in China’s robust and growing economy. This economy is showing a healthy expansion of 6.7 percent over the first three quarters. Produce prices, in September, increased for the first time in five years, as well.

However, this latest slew of solid economic numbers left the favorite proxy of China relatively unmoved. We are talking about the AUD/USD Forex market. The Australian Dollar was trading at 0.7603 before the release and 0.7609 after the release at 1:50 am GMT time. The Aussie climbed after RBA decision and Chinese dat and currently is trading at 0.7669 up 0.84%, the Kiwi followed the trend and trades at 0.7174 0.35%. Traders should keep in mind that the Australian Dollar is not always a proxy of China, even with the strong trading ties The Down Under has with China.

Sometimes, the Aussie Dollar tells us about local economic policy and bets on what the United States interest rates will do. This could be the story today. The AUD/USD failure to rise above the 0.77 handle, since last week’s local consumer price data could be indicative of some stabilization in Australia’s monetary policy. This means a further rate cut from their central bank is less likely. There has also been increases in the price of coal and iron. These are key exports of Australia. However, we have not seen a big lift in the Australian Dollar.

Financial markets are still counting on a higher rates from the United States by year’s end and the Aussie Dollar could be more bullish for it. The US Dollar will also be more bullish. Today’s the financial markets, in Australia, were thin on volume as it is Melbourne Cup Day. Often called the “horse race that stops a nation.” Trading desks were thinly staffed which caused drifting in the markets from the Down Under.