Aussie Strongest Despite Surprise Drop in China’s Services PMI

The market sentiment remained favorable for commodity currencies, allowing them to maintain a rally. The Australian dollar was the strongest among them, rising against all other most-traded currencies. The Aussie managed to rally even after macroeconomic data showed slower-than-expected expansion of the services industry in China, Australia’s biggest trading partner. Meanwhile, the rally of crude oil prices was helping commodity currencies, especially those of oil-producing countries.
The seasonally adjusted Caixin China Services PMI fell from 57.8 in November to 56.3 in December instead of rising to 58.1 as analysts had predicted. The drop shown by the private report was in line with official government data released on December 31, which also showed a drop in the services Purchasing Managers’ Index. Despite the decline, the index remained firmly above the neutral 50.0 level, meaning that the industry continued to expand, just a bit slower. In fact, the pace of expansion remained one of the fastest in the past decade. The report commented:

Latest PMI data indicated that Chinese services activity growth slowed in December, but remained marked overall. New business also expanded at a softer pace, amid only a modest increase in new export sales. Business confidence meanwhile remained robust and improved to the highest since April 2011 due to hopes of a further rebound in global economic conditions.

With no important events scheduled in Australia for today, the Australian currency will be reacting to outside factors. In particular, market participants watch the US Senate runoff elections in Georgia. The rally of crude oil prices was another important event that hit headlines. The rally was a result of the decision by Saudi Arabia to cut oil production as a way to compensate for increasing output in Russia and Kazakhstan.
AUD/USD gained from 0.7767 to 0.7797 as of 7:55 GMT today, rebounding from the session minimum of 0.7733. EUR/AUD fell from the opening level of 1.5835 to 1.5823 after rising to the session maximum of 1.5880 earlier. AUD/CAD jumped from 0.9830 to 0.9866, bouncing from the daily minimum of 0.9816.
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Original from: www.earnforex.com