Australian Dollar Starts Year on Strong Footing

The Australian dollar traded mostly higher against its most-traded rivals on the back of the positive market sentiment. Traders looked into the future with optimism thanks to expectations of coronavirus vaccine rollouts and the subsequent recovery of the global economy. A manufacturing report for China, Australia’s biggest trading partner, missed expectations but it did not seem to have a material impact on markets, perhaps because the data was not outright bad.
The seasonally adjusted Caixin China Manufacturing Purchasing Managers’ Index slipped from 54.9 in November to 53.0 in December, far below the median forecast of 54.7. Despite the noticeable decline, the index was still above the neutral 50.0 level, meaning that the sector continued to grow fast, even though the pace of growth slowed somewhat. Indeed, the report said about the result:

The health of China’s manufacturing sector continued to improve in December, albeit at the softest rate for three months. Firms signalled slower, but still steep, expansions of output and total new work, while export sales rose modestly.

As for the outlook for the future, the report stated:

Looking ahead, firms were still optimistic that output would increase over the next year, though overall confidence dipped to a three-month low.

Turning to macroeconomic releases in Australia itself, data from the Reserve Bank of Australia revealed that the Index of Commodity Prices climbed by 11.7 in December. That was a sharp acceleration from the previous month’s 2.5% rate of growth.
AUD/USD rose from 0.7699 to 0.7712 as of 6:52 GMT today after falling to the low of 0.7681 earlier during the session. EUR/AUD traded at about 1.5886, near the opening level of 1.5880, retreating from the session high of 1.5934. AUD/JPY edged up from 79.37 to 79.44.
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Original from: www.earnforex.com