Australian Dollar Advances As China Service Activity Moves To Expansion
June 02 2020 - 11:27PM
RTTF2
The Australian dollar climbed against its major counterparts in
the Asian session on Wednesday, as China's services sector returned
to expansion last month for the first time since January, signaling
recovery in economic activity from the coronavirus crisis.
The Caixin/Markit services Purchasing Managers' Index (PMI) rose
to 55.0 in April from 44.4 in April, hitting the highest level
since late 2010.
Expectations for V-shaped recovery coupled with expectations of
central bank policy support helped investors shrug off rising
geopolitical risks.
Survey results from IHS Markit showed that Australia's private
sector contracted substantially in May as ongoing measures to
contain the spread of the coronavirus continued to hit demand.
The Commonwealth Bank services Purchasing Managers' Index
climbed to 26.9 in May from 19.5 in the previous month. However, a
score below 50 indicates contraction.
Data from the Australian Bureau of Statistics showed that
Australia's gross domestic product dropped a seasonally adjusted
0.3 percent on quarter in the first three months of 2020.
That was in line with expectations following the 0.5 percent
quarterly gain in the three months prior.
The aussie firmed to 5-month highs of 1.6033 against the euro
and 0.6983 against the greenback, after earlier falling to 1.6222
and 0.6886, respectively. The aussie is seen finding resistance
around 1.57 against the euro and 0.72 against the greenback.
The aussie appreciated to a 4-1/2-month high of 75.76 against
the yen and more than a 1-year high of 0.9415 against the loonie,
off its previous lows of 74.80 and 0.9310, respectively. If the
aussie rises further, 78.00 and 0.96 are possibly seen as its next
resistance levels against the yen and the loonie, respectively.
In contrast, the aussie fell to 1.0812 against the kiwi, from a
high of 1.0861 seen at 9:20 pm ET. The aussie is likely to find
support around the 1.06 level.
Looking ahead, PMI reports from major European economies, German
jobless rate for May, Eurozone PPI and jobless rate for April are
due in the European session.
U.S. ADP private payrolls data for May is scheduled for release
at 8:15 am ET.
At 10:00 am ET, the Bank of Canada announces decision on
interest rates. Economists forecast the benchmark rate to remain at
0.25 percent.
In the New York session, U.S. ISM services PMI for May and
factory orders for April are set for release.
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