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AUD/USD Bulls Advance To 0.650 After China PMI And Australia Data, With a Concentration On Fed Inflation Data
AUD/USD gains bids to reverse yesterday's retreat from a two-week high. China's official PMIs for the month of August in Australia were varied, but mostly impressive. US economics support a Fed policy reversal and bolster the upside bias. Australian traders are cautious advance of the US Core PCE Price Index.
AUD/USD gains offers to retest intraday highs near 0.6500 after China's official NBS Manufacturing PMI surprised to the upside on Thursday morning. In doing so, the Aussie pair reverses the previous day's retreat from the highest level in two weeks, despite negative readings for China's Non-Manufacturing and conflicting results for Australia's Private Sector data.
However, China's official NBS Manufacturing PMI for August rose to 49.7 compared to 49.4 anticipated and 49.3 prior readings, while the Non-Manufacturing PMI came in at 51.0 compared to 51.5 prior and market expectations of 51.1.
In addition, Australia's Private Capital Expenditure (Capex) for the second quarter (Q2) increased 2.8%, compared to 2.4% previously and 1.2% expected, while Private Sector Credit grew 0.3% month-over-month, versus the 0.3% predicted by analysts and the previous readings of 0.2%. Notably, Australian Private Sector Credit decreased to 5.3% YoY in July, down from 5.5% in June.
On Wednesday, Australia's Monthly Consumer Price Index (CPI) displayed the 4.9% YoY figures for July compared to 5.2% expected and 5.4% previously, while Building Permits plummeted with a -8.1% figure for the same month compared to -0.8% market forecasts and -7.1% reported in June.
Aside from the data, the disappointing preliminary readings for Friday's Nonfarm Payrolls (NFP) also attracted AUD/USD purchasers, as the ADP Employment Change fell to 177K versus 195K market expectations and 371K previous readings (revised from 321K). In a similar vein, the second readings of the US second quarter (Q2) Gross Domestic Product (GDP) Annualised decreased to 2.1% from initial projections of 2.4%, while the GDP Price Index decreased to 2.0% from initial readings of 2.2%. In addition, the initial estimates for Personal Consumption Expenditures (PCE) Prices for the period in question decreased to 2.5% from 2.6% previously.
Nevertheless, US Consumer Confidence and activity data, as well as housing market data, previously supported dovish forecasts regarding the US central bank and weighed on the US Dollar.
On a separate page, China's response to US allegations that "it's risky for businesses" undermined earlier expectations for a smooth running of Sino-American talks in Beijing, which in turn tested AUD/USD buyers on Wednesday morning. However, a number of Chinese banks lowered mortgage rates and bolstered expectations of further stimulus from the Asian superpower, thereby repairing the harm to sentiment and defending Aussie pair buyers. It's worth noting that Bloomberg released news that "Australia and the European Union will resume talks on a free trade agreement after negotiations broke down in July," which has contributed to the recent upward trend in prices.
In this context, the S&P 500 Futures are unable to track Wall Street's gains due to a cautious mood preceding the release of important US data. However, benchmark US 10-year Treasury bond yields remain under pressure, hovering around 4.11 percent at press time, the lowest level in three weeks.
In the near future, AUD/USD traders should closely monitor the US Core PCE Price Index for August, which is anticipated to remain unchanged at 0.2% MoM but increase to 4.2% YoY from 4.1% previously, for intraday direction amid Fed policy pivot concerns.
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