LOWER than expected Chinese Purchasing manufacturing index (PMI) data has tempered any recovery in the Australian dollar.
The Aussie opened last week with hopes of a possible recovery on the back of positive data released earlier in the month. However the Chinese numbers, which surprised analysts, soon dampened the sentiment.
Market signals continued to decline as Australian’s neighbouring counterpart, New Zealand, continued to strengthen. The Aussie now sits near its five year low against the Kiwi as contrasting monetary policies seem to be determining factors in performance. This along with opposing business confidence reports showed that the majority of the Australian firms had a pessimistic future outlook whilst Kiwi reports showed their local business confidence sitting at a three year high.
Talks have once again begun to loom over the possibility of an interest rate cut by the RBA; their next meeting is scheduled for 6 August. Speculation suggests that we could see the rate drop further to a record low of 2.5%, down from a previous low of 2.75%.
Looking ahead, important data that will determine the Aussies price movements this week includes Chinese manufacturing on Thursday along with Australian Producers Price Index data early Friday.
Composed by Anton van Teylingen
Exchange rates at 10:00GMT 29 July 2013