AUD/CAD: Loonie To Lose On Aussie Boost From Chinese Data

AUD/CAD price movement is projected to take another bullish turn after some correction was recorded earlier today. It looks likely for the Canadian dollar to pare its gains over its Australian counterpart from yesterday. Data from China earlier today is deemed to boost the demand for the Australian dollar, which in turn debilitates the rush for the Canadian ComDoll. A rise above the 1.0491 price resistance is seen to drive the valuation of the currency pair higher in the ensuing trades.

Risk sentiment for the aussie improved after preliminary results of an HSBC survey showed that China purchasing managers' index rose in July to its highest level since February. The HSBC Flash Purchasing Managers Index, the earliest available indicator of manufacturing activity in China, rose to a five-month high of 49.5 points in July from a grade of 48.2 in June. A pickup in the pace of manufacturing output is seen as a turn for the better after manufacturing activity has contracted every month since October last year.

Such was the elation of market traders on positive data from the world’s second largest economy that the trades of the Aussie dollar picked up. A rise of 43 pips was registered by the AUD/CAD, since the release. Anxieties over the European bloc were also eased by the statistic that some Asian equities made gains.

These were supported by statements from Reserve Bank of Australia Governor Glenn Stevens who spoke at the Anika Foundation Luncheon in Sydney, easing concern his nation is vulnerable to shocks from a slower Chinese economy. “Even if the pessimists turn out to be right on one or more counts, it doesn’t follow that we would be unable to cope,” Stevens said. “Acting sensibly, with a long-term focus, has as good a chance as ever of seeing us through whatever comes our way.”

These fundamental data are believed to sustain the upside prospects of the aussie-loonie in the currency exchanges today. As such, a buy bias is seen for the AUD/CAD. Be wary however of economic releases from StatsCan today. A pickup is also slated from upcoming retail sales reports for the month of May.