This update examines factors that could affect AUD exchange rates this week. The below table displays the difference in Australian Dollars you would have achieved when buying £200,000 during trading yesterday.

Currency Pair% ChangeDifference on £200,000
GBP/AUD1.58%AUD $5440.00

Chinese PMI data

Worrying signs for China’s economy emerged this morning as latest set of Purchasing Managers Index data was worse than expectations, coming in at 49.6 for the month of May compared to the estimated 50.1 estimated and the 50.3 previously. A reading above 50 signals expansion within the industry and a reading below 50 signals contraction. This could potentially spell long term weakness for the Aussie.

The reason why this influences the Australian Dollar is that China is Australia’s largest trading partner. If the economy in China appears to be on the up, it will require more resources to support its economy. As a major producer of Iron ore and other raw materials which are required and used by the Chinese, if the economy appears to improve so does the AUD. This morning’s data release means that less factories are producing and therefore a need for raw materials is decreasing.

This data is contrast to the official Chinese figures the day before which actually showed an increase in the sector, however the Caixing report focuses on small to medium sized businesses and not the larger state funded manufacturers. Analysts are claiming this to be worrying signs for the Chinese and therefore could spell medium to long term weakness for the Aussie.
Retail Sales Data

Domestically, things down under aren’t as bad as their largest trading partner. Retail sales jumped a massive 0.7% above what was predicted and gave the Aussie a short time spike this morning. Currently, the general election is weighing heavily on the GBPAUD as investors look for safer currencies such as the Euro and the USD and take their investments away from risker currencies such as the AUD. Economic data releases such as this morning can provide short term windows of opportunity. Get in touch to find out how to capitalise.

For more information on how future data releases could affect your Dollar requirement, please feel free to get in touch here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.