iNVEZZ.com Monday July 1th: The Australian dollar has recovered some ground today, after falling on Friday to its lowest level since September 2010, touching 0.9113.
In European trade the pair has broken through the 0.92 level, albeit staying within a narrow channel a few pips above and below.
The rise has come despite the release during Asian trading of two conflicting reports on Chinese manufacturing.
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The official manufacturing purchasing managers index, released by the Chinese Federation of Logistics and Purchasing, came in at 50.1 for June, above expectations for 50.0, following a reading of 50.8 in May. But the HSBC manufacturing PMI for June fell to a nine-month low of 48.2, down from a preliminary reading of 48.3 and below the 50 level that separates expansion from contraction.
Thomas Averill, managing director of the currency and interest-rate risk-management company Rochford Capital, based in Sydney commented: “The fall in Aussie will provide some stimulus into the economy itself. If you start to see Aussie sub 90 and staying there, I think interest-rate cuts from the RBA will become less likely.”
According to Christopher Hall, a senior investment officer at Adelaide-based Argo Investments Ltd, Macquarie, Australia’s largest investment bank, could increase its earnings by 1.4 percent for each one cent fall in the AUD. The bank derives 63 percent of its revenue from outside Australia.
According to the Australian Industry Group survey, released today, the Australian manufacturing index rose to 49.6 in June from 43.8 in May. TD Securities Inc. and the Melbourne Institute today published a common index, showing consumer prices rose by 2.4 percent last month y/y after a 2.2 percent increase in May.
Tomorrow the Reserve Bank of Australia is expected to announce at 05:30 BST its benchmark interest rate decision.