Chinese PMI Lifts Currency Down Under
Currency markets continued to consolidate on the heels of last week’s large moves after the Federal Reserve decided not to taper their bond purchase program. The dollar gave up ground as yields moved in favor of other countries, driving the forward rates away from the greenback. Solid PMI data helped the Australian dollar gain traction during the Asian trading session, which continued to spill over during the North American time zone.
According to market reports Chancellor Merkel appears set to win a third term as the leader of German. Merkel will likely need a new coalition partner after her Christian Democratic Union fell just short of a majority. A Grand Coalition between the CDU and SPD still appears to be the most likely scenario.
In Europe, manufacturing and service surveys for the month of September were release. Softness was evident in manufacturing but services continued to outperform. This helped lift the composite to new 2 year highs of 52.1. Germany’s manufacturing PMI edged lower to 51.3 from 51.8 in August. The PMI service reading increased to 54.4, a new 7-month high, from 52.8. In France the service sector printed at 50.7 from 48.9.
In Asian, the economic data out of China the world’s second largest economy was impressive. The HSBC flash PMI for China climbed to 51.2 from 50.1 in July which is a new six month high. The news helped buoy the Shanghai despite the initial decline in Asian equity bourses following the US’s meltdown on Friday.
The Australian dollar continued to move higher, bouncing off of support near the 10-day moving average near 0.9300. The currency pair has rallied nearly 5% off of its August lows, and is poised to test resistance near 0.9500.
Momentum on the currency pair is positive with the MACD (moving average convergence divergence) index printing in positive territory.
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