2 September, 2013
The Asian markets reacted positively to data out of China which gave hope that the second largest global economy is track for growth after a recent slowdown.
China’s manufacturing sector showed signs of growth in august based on two PMI indexes. The HSBC PMI was up at 50.1 in August, up from July’s 11-month low of 47.7. Meanwhile the official Chinese government PMI also rose, giving a reading of 51.0, above the median estimate of 50.6.
The Australian dollar opened on Monday with a gap of some 40-pips higher against the U.S. dollar after reacting to the China data. AUDUSD rose to $0.89.7, up 0.8 percent after slipping 1.4 percent last week.
China is a major export destination for Australia so the strong data is positive for the Aussie. Also domestic Australian building data lifted the Aussie. Building approvals in increased more than expected to 10.8 percent versus 4.1 percent expected, up from a previous decline of 6.3 percent.
In other currencies, the yen weakened on news that Japanese PM Shinzo Abe will implement higher sales taxes as part of a plan to stimulate the economy. USDJPY gapped higher to above 98.30 while EURJPY rebounded from a two-week low, climbing up to 130.30.
Euro is steady around $1.3200 after slipping slightly in the Asian open, as investors are waiting for a series of PMI data out of Europe today.
Sterling gapped higher, on the back of news of a Verizon / Vodafone merger. The pound’s direction will be clearer as focus turns to U.K. manufacturing PMI data. GBPUSD opened in Asia at $1.5531 and rose to a session high of $1.5564.
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