The Australian Dollar strengthened against the US Dollar following the release of China's Caixin Manufacturing PMI. While the index unexpectedly fell, it remained in expansionary territory for the 14th consecutive month. This positive signal for the Chinese economy, a key trading partner for Australia, supported the AUD. Meanwhile, the US Dollar Index reached multi-year highs due to the Federal Reserve's hawkish shift in monetary policy.
The Australian Dollar (AUD) received support after the release of China's Caixin Manufacturing PMI on Thursday. China's manufacturing output in December continued to expand, marking its 14th consecutive month in growth territory. The US Dollar Index (DXY) bounced back to multi-year highs due to the Federal Reserve 's hawkish policy shift. The Caixin Manufacturing PMI unexpectedly dropped to 50.5 in December, down from 51.5 in November. The market had anticipated a reading of 51.7 for the month.
Wang Zhe, an economist at Caixin Insight Group, commented, “Supply and demand expanded. Manufacturers’ output and demand continued to grow as the market improved. The gauge for output remained in expansionary territory for the 14th consecutive month, while total new orders increased for the third straight month.” The Reserve Bank of Australia’s (RBA) policymakers had grown more confident about inflation, though risks persisted. The board emphasized the need for monetary policy to remain sufficiently restrictive until there was greater certainty about inflation. Australian Dollar appreciates despite a stronger US Dollar amid Fed’s hawkish policy shift The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, has rebounded to multi-year highs, trading around 108.50 at the time of writing. This surge is attributed to the US Federal Reserve's (Fed) hawkish policy shift. The Federal Reserve may adopt a more cautious outlook regarding further rate cuts in 2025, signaling a shift in its monetary policy stance. This change reflects uncertainties surrounding potential policy adjustments in light of the anticipated economic strategies of the incoming Trump administration
AUSTRALIAN DOLLAR CHINA ECONOMY MANUFACTURING PMI US DOLLAR INDEX FEDERAL RESERVE
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