Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar starts thisweek below 0.7300, after global sharemarkets traded 3% lower on Friday, in reaction to softer than expected flash PMI manufacturing data from China.

Australia: On Friday afternoon we saw from China the flash Caixin PMI manufacturing data for this month fall to 47.1 from last month’s figure of47.8 which was much lower than the 48.2 figure predicted. This figure is the lowest since March, 2009. Also worrying the financial markets was a marked decline in new orders (47.2 to 46.3) and employment which fell to 46.0 from last month’s 47.2 figure. The AUD held up pretty well during thecarnage on international share markets as more economists changed their view about the chances of the US Federal Reserve raising interest rates at their next meeting in September. Currently there is a one in three chance of rates being raised which is down from the 50-50 feeling last week. This has sent the USD lower with the EUR and JPY the main beneficiaries.The AUD is likely to maintain its weakish tone as financial markets assess the likelihood of further weakness in the world’s second largest economy.

Majors: Also on Friday in the US we saw the latest PMI manufacturing figures for August which declined modestly from 53.8 to 52.9. In Europe, composite PMI data in the Eurozone and Germany were up marginally. Europe’s figures improved from 53.9 to 54.1 while Germany rose to 54.0 from last month’s figure of 53.7. In the UK, there was improvement in the public sector with a budget surplus recorded in July of GBP1.3bn while tax receipts have improved 5.7% this financial year. This week we will see anumber of new data releases from the US including the latest consumer sentiment survey, durable goods orders and personal consumption expenditure for July and GDP data for Q2. The slowdown in China and its effects will occupy the attention of the financial markets in the next fewweeks.

Economic Calendar 24 AUG

  • NZ RBNZ Deputy Governor Spencer Speech
  • US Chicago Federal National Activity Index Jul
  • GE Import Price Index Jul
  • US Federal Reserve Governor Lochart Speech

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