The expansion of China’s manufacturing sector in November has boosted demand for the commodity based currencies of the Australian and New Zealand Dollars and economists are hopeful that the Chinese economy is on the right track for a rebound.
The world’s second largest economy posted a PMI figure of 50.4 the first time it has shown expansion in 13 months. The preliminary November reading marks the first time in 13 months that the index has been in expansionary territory, signalling growth for the nation’s manufacturing sector. A reading above 50 indicates growth.
The latest data follows a rise in fixed asset investment, industrial production and retail sales in October, announced before China’s leadership transition.
Qu Hongbin the chief economist at HSBC said that the nation’s expansion in manufacturing “confirms that economic recovery continues to gain momentum towards the years end.”
The ‘Aussie’ is trading upwards after being buoyed by news of an improvement in the pace of manufacturing in China in November. The strength of the Chinese data also helped the ‘Aussie’ after economists lowered their prediction of a further cut in the nation’s interest rates. The ‘Kiwi’ is also trading upwards thanks to the strong Chinese Manufacturing Purchasing Managers Index.
The manufacturing sector has been the main force behind China’s economic boom but in recent months it has been hit by a slowdown in demand from the Eurozone, USA and Japan. The global economic crisis hurt the nation’s growth prospects which fell to a three-year low in July-September.
“It is still the early stage of recovery and global economic growth remains fragile,” said Mr Qu of HSBC. “This calls for a continuation of policy easing to strengthen the recovery.”
The Pound to Euro exchange rate is currently trading at 1.2397
The Pound to US Dollar exchange rate is currently trading at 1.5949
The Pound to Australian Dollar exchange rate is currently trading at 1.5383
The Euro to US Dollar exchange rate is currently trading at 1.2865
The Euro to Pound exchange rate is currently trading at 0.8065
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