- China’s Caixin snapshot of private manufacturing hit a three-month high in June
- That was a little better than expected, just as the official picture had been last week
- However, US holidays and a looming Australian monetary policy meeting seem to be eclipsing all else for the Aussie
See how the trading community views the Australian Dollar as a July gets under way at the DailyFX Sentiment Page
The Australian Dollar market showed little interest in a stronger Chinese manufacturing survey Monday, with its probable focus elsewhere.
The Caixin manufacturing Purchasing Managers Index rose to 50.4 in June. That was above both the 49.8 expected and May’s 49.6. It was also a three-month high At least as importantly, it was a return to expansion territory. In the logic of PMIs any reading above 50 signifies a rise here.
While the release was broadly positive, the sub-indexes for stocks of purchases and finished goods both fell into contraction territory. This suggests that, while business may be good at the moment for Chinese manufacturers, firms are not necessarily re-stocking as they might if they hoped that gains would be sustained. Moreover much of the overall increase was down to some quite marginal gains in production and new orders.
The Caixin index covers China’s smaller, private companies in contrast to the already released official variant which concentrates on larger, often State-linked concerns. The two can be at variance but do not seem to have been this month. The official figure also beat expectations when it was released last week.
The Australian Dollar’s lack of response to this data could be down to thinner markets, or anticipation of the same, as the US Independence Day holiday on Tuesday limits trade in the run-up. The Reserve Bank of Australia will give its July monetary policy call on Tuesday. It is not expected to move the key Official Cash Rate from its 1.50% record low but, given the more hawkish tone struck by many developed-market central banks, investors are waiting to see whether the RBA follows suit.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX