The Australian Dollar opened with a low of 87.30 US Cents after Chinese Manufacturing PMI Data released over the weekend slipped closer to the expansion/contraction line. The result was 50.8, whilst still above the 50.0 indicator for expansion, the result is a decline from the previous results and was below the forecast for 51.1.
The Manufacturing PMI data was a less than positive result indicating that the Chinese economy is slowing down. The release of this data caused a selloff of the Australian Dollar against all the majors, most significantly the US Dollar and Pound as China is one of Australia’s most influential trading partners.
Friday during the offshore session also provided the release of Canadian Gross Domestic Product figure for the month of October; this was a negative figure of -0.1%. The AUD barely registered a movement with this data release given the recent Chinese Data disappointing the market.
Today should provide a relatively stable day of trading with the only local high level data out in Australia the Building Approvals for the month. This measures the change in the number of new building approvals issued and provided a good indication of future construction activity which has wide reaching effects, stimulating the economy. The previous result was 3.0% and the forecast for this month is -0.9%.
China will release the HSBC Final Manufacturing PMI figure today around lunch time; this however may not cause substantial impact as investors have already digested the PMI result from the weekend. The UK will also release their manufacturing PMI data during the offshore trading session. The expectation is for a stable figure with last month from 51.6 to a forecasted result of 51.5.
For the week ahead the significant days for local data include Tuesday with the Reserve Bank of Australia Interest Rate decision. Interest rates are expected to remain on hold for some time; however the accompanying speech by Governor Glenn Stevens is likely to cause market volatility as investors look for any possible indicators of future changes to the rates.
Thursday will also provide significant event risk with the local release of Unemployment Rate and Employment Change. Last month’s Unemployment rate was at 6.1%, however the significance of this figure was somewhat muddied by an accompanying media release revising previous fluctuations in the employment rata by the Australia Bureau of Statistics due to some inconsistencies with seasonal adjustments.
The accompanying notes made comment that due to seasonal factors the trend estimates for July and August have been adjusted. The previously reported figure for unemployment in July was 6.4% which would have been the highest rate in 12 years. The ABS revised this figure back to 6% and adjusted August from 6.1% to 6%.
This may mean that this month’s result will be taken with a degree of scepticism.