Australian Dollar Advances As China Service Activity Moves To Expansion

Date : 06/03/2020 @ 4:27AM
Source : RTTF2
Stock : Euro vs Japanese Yen (EURJPY)
Quote : 120.74353  -0.08647 (-0.07%) @ 8:31AM
Euro vs Yen share price Chart

Australian Dollar Advances As China Service Activity Moves To Expansion

Euro vs Yen (FX:EURJPY)
Forex Chart

From May 2020 to Jul 2020

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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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