The Australian dollar strengthened in Asian trading on Thursday’s close after China’s manufacturing figures turned into positive and boosted regional sentiment.
AUD/USD edged higher by 0.27% to settle at 0.7402, citing commodity trade with China has helped give a lift on the currency, while USD/JPY traded at 114.21, down 0.21%.
China’s semi-official CLFP manufacturing index stood at 51.7 in November, topping the 51.0 level seen in the previous month. Meanwhile, the CFLP non-manufacturing PMI hit 54.7, compared to 54.0 level seen last month.
Subsequently, the Caixin manufacturing PMI figures rallied to 50.9 in November, topping the expected level of 50.8.
The Caixin index is currently above the 50-point neutral level, which splits up the expansion in activity from contraction for five consecutive months, citing credits and construction boom has sent the world’s second-largest economy growth to remain steady.
Evidently, Australia’s AIG manufacturing index climbed to 54.2 in November from an earlier reading of 50.9 last month. There were also reports on the private new capital expenditure, which has declined 4.0%, more than a 2.5% drop seen in the third quarter.
The U.S. dollar index, which gauges the dollar against a basket of major rivals, dropped by about 0.17% to settle at 101.46.
Expectations on AUD/USD
Ahead of the recent headlines on OPEC for the month-end, the pair has lost its bullish tone, unable to break through 0.7500, despite a steady dollar since November 20 where the Australian dollar edged higher from a touch of the 0.73 handle.
The markets have built sentiments on the dollar again, while all eyes are on the Fed decision in the next month, including next year’s prospects for bond prices, suggesting upcoming data could be in for a time of reflationary pressures.
The dollar remained stronger and rates were also sent higher today due to OPEC’s clinched deal.
Commodities Drives Sentiments
Copper and gold prices have also sent the currency pair to rebound from yesterday’s low, which hit at 0.7368. In addition, a better-than-expected Chinese PMI reports has outweighed Aus cape figures, shaking the renewed upside in the major.
At present, the spot is expected to get influenced by the US weekly jobless claims, along with the ISM manufacturing PMI data scheduled later in the NA session. On the other hand, the main risk event includes the Aus retail sales and US NFP data that is set on Friday.
Current Stance of AUD/USD Pair
The chart below illustrates AUD/USD price movement ahead of the recent Chinese PMI reports along with the scheduled US weekly jobless claims and ISM manufacturing PMI data.
Given a bullish tone of the pair, market participants indulged in selling the currencies as it is likely that the US weekly jobless claims and ISM manufacturing PMI data will give a huge impact on the pair.
Further, the pair is currently settling below the previous support of 0.74197 and is slightly away to position above its new resistance.
As the illustrative chart above shows a bullish tone of the pair, market participants are recommended to still wait on the sidelines as there aren’t any supporting candle present as of today’s close.
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