Australian Dollar Declines as Chinese Report Momentum Fizzles Out

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Australian Dollar Declines as Chinese Report Momentum Fizzles OutThe Australian dollar declined in early morning trading in Sydney as its earlier momentum fuelled by favorable Chinese manufacturing data faded. The Aussie was trading at 92.27 US cents at 7:00 a.m. in Friday local time, down from Thursday’s high of 92.35 cents.

The currency touched a high of 92.75 US cents after a joint survey of Chinese purchasing managers by Markit Economics and HSBC showed that Chinese factory activity rose to the highest level in five months in May. The Aussie roes on the news, but started fizzling out after the US dollar started rising against its major peers, Kymberly Martin, a markets strategist at Bank of New Zealand told The Sydney Morning Herald.

“I think the weakness overnight was reflective of broad US dollar strength as opposed to anything specific to the Australian dollar,” she said.”When you look across most of the major currencies the US dollar has strengthened pretty much across the board.”

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Martins revealed that she forecasts the Aussie to hover between 92.10 US cents and 92.70 US cents today. She also said that the market is waiting for May’s data on German IFO business sentiment, which will be released in the evening, local time.

However, analysts were unable to closely attribute any factor for the US dollar’s rally on Thursday, as US data was mixed. In the US, fresh applications for unemployment benefits grew more than forecasted while sales of pre-owned homes surged in April, the first time to do so this year. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com