- Australian Dollar (AUD) recovers from US – Sino trade mix up
- Australian PMI data fuels hopes of a V-shaped recovery as service sector & manufacturing sector smash forecasts
- Pound (GBP) investors cheers signs of the UK economy rebounding as manufacturing activity returns to expansion
- At 08:00 UTC, Pound Australian Dollar exchange rate (GBP/AUD) trades flat at 1.0844
The Australian Dollar is well matched versus the Pound on Tuesday. The Aussie Dollar settled +0.3% at 1.8044 in the previous session, following upbeat comments from the Reserve Bank of Australia’s Governor Dr Philip Lowe.
At 08:00 UTC, GBP/AUD trades flat after a spike higher overnight following a US – China trade mix up and following upbeat PMI data from both the UK and Australia.
Volatility hit the Aussie Dollar in the Asian session after US Trade Secretary Peter Navarro said that the US – China trade deal was over. President Trump quickly contradicted Navarro confirming that the trade deal was still “fully intact”. The sharp drop lower in the riskier Australian Dollar and whipsaw action in the broader market proves that US- China trade relations are still a significant driver for risk sentiment and the markets.
Domestic data is also keeping the Aussie Dollar buoyant. The Markit and Commonwealth Bank service sector PMI rebounded strongly in June as the economy continued to reopen. Activity in the service sector soared back into expansion, at 53.2 on the PMI gauge. This was well ahead of May’s 26.9, and expectations of 25.7.
The data shows that the economy has passed the worst and has boosted hopes of a V-shaped recovery.
The Pound was also well supported by encouraging PMI data. The figures showed that activity in the manufacturing sector in June was once again in expansionary territory at 50.1, up from 40.7 in May and well ahead of expectations of 45. The level 50 separates expansion from contraction.
Meanwhile, data revealed that activity in the dominant service sector continued to contract in June but at a much slower pace, reaching 47, a magnificent jump from 29 in May. The significantly stronger than forecast figures have boosted hopes of a quicker economic recovery from the coronavirus hit.
