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Australian Dollar Falls as Chinese PMI Falls Short of Expectations

Cheng Li

Talking Point:

  • China Flash Manufacturing PMI Came in at 50.4 vs. 50.8 Expected, 50.9 Oct.
  • Weak New Export Orders, Slow Inventory Rebuild Cited as Reasons for Soft Print
  • Aussie Dollar Sold on Fears Chinese Slowdown Carries Australia Spillover Risk

AUD/USDfell after HSBC reported its Manufacturing PMI gauge came in at 50.4 in November, below 50.8 expected and 50.9 recorded in October. The Aussie tumbled from 0.9316 to 0.9292 lowest since Nov 14. Similar price action was observed elsewhere, EURAUD rose from 1.4410 to 1.4443 and on the same note AUDJPY tumbled from 93.51 to 93.27.

According to HSBC Chief China Economist Qu Hongbin China's growth momentum softened a little in November, as the HSBC Flash China Manufacturing PMI moderated due to the weak new export orders and slowing pace of restocking activities". He also suggests that muted inflationary pressures should enable the Chinese government to maintain a growth-supportive policy setting.China is Australia’s top export market, so a slowdown there may hurt Australian growth and threatens to restart RBA interest rate cuts.

From here, the market will shift focus on US PPI data, as well as the weekly report on Initial Jobless Claims and the Philly Fed Manufacturing Activity gauge.

China Flash Manufacturing CPI Data at a Glance

- HSBC/Markit Flash Manufacturing PMI: 50.4 in November vs. 50.8 Expected, from 50.9 in October.

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AUD/USD 5-minute Chart: November 21, 2013

Australian_Dollar_Falls_as_Chinese_PMI_Falls_Short_of_Expectations_body_china_pmi.png, Australian Dollar Falls as Chinese PMI Falls Short of Expectations

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-- Written by Cheng Li, DailyFX Research. Feedback can be sent to cli@fxcm.com

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