The Australian Dollar has started the month on the front foot, this is mainly due to some better than expected data coming from China yesterday. With AUD holding a strong tie to the Chinese economy, the boost was mutual for both parties. To start the week the GBP/AUD exchange rate is down from the end of last week, with resistance being shown on the charts.
Chinese PMIS Exceed Expectation, Bring up AUD with It
Yesterday, the release of China’s November PMIs were released, all three beat expectations. The Caixin manufacturing index came in at around 51.8, which beat the market prediction of 51.5. This figure also pushes up to a three-year high, this might be a hint that the Chinese economy is on the mend. For Australia, China is its prime trading partner, the pick-up in the Chinese economy is a huge boost for AUD and its outlook. The positive news took AUD above GBP, EUR and USD on Monday.
GBP/AUD Exchange Rate Drops Following Resistance on the Charts
The GBP/AUD exchange rate is currently trading at 1.9068, which is down 0.30% from where it finished up on Friday last week. This drop has coincided with the rate reaching a peak against a notable level of resistance on the charts. GBP/AUD previously struggled to overcome the level of around 1.9091. However, on Friday, the exchange rate pushed through this resistance as it rallied to highs that haven’t been matched since the 2016 EU referendum.
AUD Outlook Appears to Be Dominated by the Upcoming RBA Decisions and Third Quarter GDP Data
For AUD, the outlook seems to be revolving around the RBA and the release of GDP data over the course of the rest of the week.
For the RBA, markets are considering whether the RBA will cut interests rates again in 2020. There are also concerns that they may begin to print money to buy government bonds which would introduce a quantitative easing programme – something that the RBA suggested wasn’t on the horizon. Both QE and rate cuts would give a boost to the Aussie economy, but a trade-off would be that AUD would be weaker in 2020. The RBA is set to take place later today (Tuesday).
For Wednesday, attention will turn to the Australian Bureau of Statistics who are set to release the Q3 GDP for 2019. Any positive figures will likely give the Aussie economy a further boost off the back of the strong Chinese data that emerged.
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