The January Caixin Purchasing Managers Index survey of private sector Chinese manufacturers came in at 51.5. This was exactly as expected and the same as December’s reading. Still, there may yet have been some relief for investors in the figure given that the official PMI released on Wednesday came in at a slower than expected 51.3. In the logic of PMIs, any reading above 50 signifies a monthly expansion for the sector in question. Caixin reported robust current performance but said that there were some clouds over future demand levels.
Australia’s domestic data had something for both bulls and bears. December’s building permit approvals slumped by 20% on the month and 5.5% on the year when a respective fall of 7.6% and a rise of 11.5% had been expected. This is a most volatile series and the holiday period may have accounted for much of the weakness seen. But all the same, it’s clear that the Australian construction industry didn’t start 2018 on a very strong footing.
Manufacturing did a lot better, however with the Australian Industry Group’s January index coming in at 58.7 This is exactly like a PMI. There were also marked improvements in the sub-indexes which contribute to the headline figure, from new-order levels to employment.
The Australian Dollar market remains focused on the ‘USD’ side of AUD/USD at the moment, but the currency slipped on building permits’ weakness only to revive somewhat into the China PMI data. The Australian Dollar can act as a liquid proxy for Chinese economic performance given Australia’s famed raw material exports to the world’s second-largest economy.
More broadly the Aussie has been a notable beneficiary of recent months’ general US Dollar weakness. AUD/USD’s impressive daily-chart climb up from the lows of mid-December saw it take out the highs of 2017 and forge on to peaks not seen since 2015. The rise probably hasn’t been solely down to the greenback’s enfeeblement
AUD/USD has unsurprisingly now strayed into
