The Aussie dollar has taken mild downturn this morning following the release of official Chinese manufacturing PMI. The local unit eased from fresh 4-month highs ahead of the release and maintained an easing bias in the ensuing period, with price action falling to lows of 104.63 US cents. Manufacturing in the world’s second largest economy fell to an index level of 50.1 in July, edging down from 50.2 in June – Economists’ has forecast the index to record a rise to 50.4.
Despite mild weakness this morning, the Australian dollar has remained resilience in recent sessions – local macro feedback has provided a solid backdrop, while moderate anxiety abroad has failed to take away too much of its sheen. Perhaps underpinning its recent divergence from the Euro has been flows from the Swiss National Bank, who overnight revealed ballooning Euro denominated reserves in an effort to protect its 1.20 peg against the Euro. The latest SNB figures show FX reserves increased to CHF365 billion in the second–quarter with the Euro accounting for 60 percent – significantly higher than 51 percent in the first-quarter. The data also showed the central bank has sought to mitigate its Euro exposure using currencies which included the Australian dollar. The Bank bought an estimated CHF60 billion euros in May, as it sought to weakness the franc in an effort to maintain its 1.20 euro-peg, amid extreme bouts of risk aversion.
In tune with yesterday’s building approval numbers, Australian house prices recorded 0.5 percent growth in the second-quarter, following a first-quarter contraction of 1.1 percent. Forecasts were for a drop of 0.5 percent. Coming up on the docket at 12.30 AEST is the HSBC Chinese manufacturing PMI gauge, which is also closely watched by markets for any significant differential between the two releases. While the official release is weighted towards larger manufacturers, the HSBC equivalent is generally viewed as a gauge of manufacturing activity from small to medium enterprises, while seasonal adjustments may also contribute to discrepancies.
At the time of writing the Aussie dollar is buying 104.75 US cents, with short-term support eyed at 104.6 US cents ahead of a critical evening in terms of economic feedback, with the greatly anticipated FOMC policy decision and U.S ISM manufacturing data in focus.