TAKEAWAY: China Manufacturing PMI Tops Expectations > Demand Outlook for Australian Mining Exports Improves, Expectations of Pause in RBA Rate Cut Cycle Reinforced > AUDUSD Gains
The Australian Dollar rose against all of its counterparts to start the trading week as markets reacted to China Manufacturing PMI data released early Sunday. The gauge fell less than expected to 50.2 in June from 50.4 in the prior month, holding above the boom-bust “50” threshold and topping expectations for a 49.9 result. The outcome showed manufacturing continued to expand last month, albeit at a slower pace.
China is Australia’s largest trading partner and manufacturing activity there is a critical determinant of demand for the country’s mining exports, the premier engine of economic growth in recent years. The narrowly stronger outcome reinforced hopes that the Reserve Bank of Australia may opt to keep interest rates on hold when policymakers meet later this week having slashed borrowing costs by a hefty 75bps over the preceding two months.
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--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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