As a result, the yearly read was 9.0% YoY rather than the expected 8.6 %. This indicates improvements in comparison to the months prior.
That information came after the Australian retail sales for the month of May increased from the projected 0.4% by 0.9 % month-over-month.
Chinese non-manufacturing PMI for this month came in at 54.7, a huge improvement over the 50.5 projected while manufacturing PMI came in at 50.2 versus the 50.5 expected. As a result, the composite PMI reading increased from 48.4 to 54.1.
A study of 3,000 manufacturers in China, primarily large businesses, produced the China PMI indices. Since it is a diffusion indicator, a value above 50 is considered to be favorable for the second-largest economy after the United States in the global economic prospects.
The figure for manufacturing was somewhat off, but the market is now more optimistic because of the non-manufacturing sector. The decline in USD/CNH was caused by Chinese Yuan buying in response to headlines.
In the context of this week’s Covid-19 restrictions, the Chinese PMI statistics were released. Arrival quarantine requirements were reduced from 21 days to 10 days which also encompasses home monitoring while in quarantine.
This step gave rise to optimism that limits would be progressively loosened and that the Covid-19 policy’s debilitating effect would soon come to an end. Economic growth is thought to be aided by an easing of the tight Covid-19 measures.
These expectations were abruptly crushed when President Xi Jinping declared that there will be no abolishing of the zero-Covid policy in China. the global markets are plagued by the fact that China does not appear to devise a clear exit strategy from the economic devastation of the Covid-19 outbreak.
Selling pressure on the AUD/USD had been present. Concerns of a recession and the Fed’s potential or actual inability to engineer a smooth transition for the US economy had caused the US Dollar to rise in preceding sessions. This seemed to push the market in the direction of alternatives with hedging properties.
Philip Lowe, the governor of the RBA announced the week before that the bank will decide whether to raise interest rates by 25 or 50 basis points at its upcoming meeting. The retail sales figures from the past 2 days may have verified the impending bigger rate hike.