A Fall in China's PMI Helps Erase Yesterday's AUD and NZD Gains

Xe Corporate APAC

July 1, 2019 3 min read

The AUDUSD opens at 0.6962 (mid-rate) and the NZDUSD opens at 0.6673 (mid-rate) this morning.

A fall below the critical 50.0 threshold in China’s Purchasing Managers’ Index, which measures operating conditions in the manufacturing sector, has helped erase yesterday’s AUD and NZD gains.

Yesterday afternoon’s Caixin report showed the index fell from 50.2 in May to 49.4 in June and below 50.0 for the first time in four months. A lack of new business and a fall in international sales along with ongoing concerns about the US-China trade dispute are the catalysts for the contraction.

The USD has pushed higher overnight after the ISM reported its Purchasing Managers’ Index declined less than forecast in June. Although the index which now sits at 51.7, its lowest level since October 2016, economists had forecast the index to fall from 52.1 in May to 51.0 in June, with the modest decline viewed as a positive.

The UK manufacturing sector contracted at its fastest pace in over six years in June with the IHS Markit/CIPS Purchasing Managers' Index plummeting to 48 in June following on from May’s 49.4 reading. The result was driven by factories reducing production due to weaker demand as Brexit-and-political uncertainty continues to damage business confidence.

This morning's, NZIER Business Confidence data release is the key driver for the NZD while this afternoon’s RBA monetary policy statement will dictate direction for the NZDAUD cross rate. This afternoon's decision has economists split between holding rates steady with the next 25 basis point cut to come at the August meeting and pulling the trigger this afternoon and cutting the OCR to 1.0%.

Global equity continue are on the rise, - Dow +0.18%, S&P 500 +0.45%, FTSE +0.97%, DAX +0.99%, CAC +0.52%, Nikkei +2.13%, Shanghai +2.22%.

Gold prices have slipped lower, down 1.7% trading at $1,385 an ounce. WTI Crude Oil prices are edging higher, up 0.45% Trading at $58.77 a barrel.

Upcoming Data Releases

  • NZ: NZIER Business Confidence - 8:00 AEST / 10:00 NZST

  • NZ: Building Consents MoM - 8:45 AEST / 10:45 NZST    

  • AU: RBA Rate Statement - 14:30 AEST / 16:30 NZST

Mid-Market Rates

AUDUSD0.6962-0.9%NZDUSD0.6673-0.7%AUDEUR0.6168-0.3%NZDEUR0.5911-0.1%AUDGBP0.5508-0.4%NZDGBP0.5278-0.2%AUDJPY75.48-0.7%NZDJPY72.33-0.4%AUDNZD1.0432-0.2%NZDAUD0.95840.2%GBPAUD1.8155-0.4%NZDCAD0.8764-0.3% GBPNZD1.89470.2%
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