Chinese PMI data out today showed that manufacturing output remains subdued in the world’s second largest economy. The official manufacturing PMI fell slightly to 49.6 in November, falling short of expectations that it would stay unchanged at 49.8. However, the private survey from Caixin pointed to a small rebound with the index rising slightly to 48.6.
The Chinese yuan was steady in today’s Asian trading following yesterday’s decision by the IMF to include the currency in its Special Drawing Rights basket. The dollar was last trading at 6.3986 yuan.
Final PMI data in Japan was more positive as the manufacturing index rose to 52.6 in November but this was lower than the initial reading of 52.8. More encouraging was robust capital spending data, which was up 11.2% in the third quarter from a year earlier, raising the prospect of upward revision to third quarter GDP data, which is due next week.
The dollar dropped against the yen after the data, hitting a low of 122.63 yen before recovering to 122.92 in late Asian trading.
The Reserve Bank of Australia kept its cash rate unchanged at 2% at its December policy meeting today. In the statement, Governor Glenn Stevens said “the prospects for an improvement in economic conditions had firmed a little over recent months” but he kept the option for further cuts open should demand weaken. The aussie had rallied against the dollar prior to the announcement, peaking at 0.7283 but fell back after the decision to trade around 0.7267 in late Asian session.
The US dollar was weaker on Tuesday with the dollar index trading down 0.2%. The euro and the pound both climbed against the greenback as a result and were up at 1.0588 and 1.5103 respectively.
Commodities also benefited from the dollar weakness with US oil futures climbing to $42 while gold was up at $1071.62 in late Asian session.
Looking ahead to the rest of the day, Eurozone and UK PMI data will dominate European trading, while Canadian GDP and US ISM manufacturing numbers will be the main data in US trading.
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