An unexpected but welcome improvement in China’s Purchasing Manager’s Index helped to improve risk appetite broadly, sending the safe haven Japanese Yen lower and the Australian Dollar higher. The preliminary reading for the HSBC PMI for May improved to 48.7 against expectations that the reading would remain unchanged at 48.1, a strong performance in the Chinese factory sector not seen since last year. Though there was still some slight contraction in manufacturing growth, today’s data suggests to FX players that fiscal and monetary policies in China may have halted the economic slowdown.
As reported at 1:21 p.m. (JST) in Tokyo, the USD/JPY pair traded at 101.63 Yen, a gain of 0.3% and pulling away strongly from Wednesday’s low of 100.80 Yen. The EUR/JPY also edged higher by 0.2% to trade at 138.95 Yen, up from yesterday’s low of 138.15 Yen. The AUD/USD moved higher to $0.9271, a gain of 0.2% and a solid improvement from the session low of $0.9220.
Fed Minutes Reassure Investors
In the U.S., the minutes from the Federal Reserve’s April meeting were released and went a long way to reassure FX players that the Fed’s ultra-loose policy, at least as regards interest rates, would remain in place until the U.S. economic recovery was on assuredly sound footing. Analysts believe that the first rise in interest rates is likely not going to happen until after the second or third quarter of 2015.