This week’s data flow has so far painted a picture of robust US economic growth but possible moderation in China.
This has combined to put pressure on the Aussie Dollar. However a solid overnight performance by US markets should deliver a firm start for trading in the ASX 200 this morning.
The US S&P 500 index followed its move to new highs with a period of unconvincing sideways drift over recent days. However, last night’s move showed signs of renewed upward momentum. The S&P 500 rose 0.76% and closed on its high with buyers in charge. Perhaps significantly for the local market, the S&P 500 was led higher by the financial sector.
The ISM manufacturing PMI indicates solid growth in the US manufacturing sector and together with the rebound in personal consumption in April bodes well for 2nd quarter GDP growth in the US.
By contrast, the move below 50 in the Caixin China Manufacturing PMI indicates at best a steady as it goes scenario. This, together with the ongoing decline in the iron ore price and the likelihood of weak Australian GDP growth, is putting downward pressure on the Aussie Dollar. As has been the case for the past couple of days, Aussie Dollar traders are likely to be focussed on the performance of China’s iron ore and steel futures market this afternoon.
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