The independent measure of the Chinese manufacturing sector beat expectations and quite big-league. The Caixin manufacturing purchasing managers’ index came out at 51.9 points, significantly better than 50.9 expected. The 50 point mark separates expansion and contraction and this publication is the best since 2013.
The Output sub-component reached a high of 53.7 points, rapid growth last seen in January 2011, that’s 6 years. The strength in Chinese manufacturing originates from demand at home, within the second-largest economy, and not from outside. The independent measure from Caixin carries more weight than the government figure released over the weekend.
Nevertheless, high production in China results in more robust demand for Australian commodities and the A$ reacts as many markets return from an extended New Year’s weekend.
The news helps AUD/USD recover from the lows, bouncing from the 0.7175 support line and reaching a high of 0.7235. The move is somewhat limited due to fresh US dollar strength.
Resistance awaits at 0.7250, followed by 0.7375. Support is at 0.71.
More: AUD: Time To Sell ‘The Most Overvalued Currency In The World’? – Deutsche Bank
Here is how it looks on the 1-hour Aussie/dollar chart:
