There were no data releases from Australia yesterday. On Monday the Aussie’s decline came after the release of the Caixin/Markit China manufacturing index on Monday that showed that China’s factory activity contracted for a 10th straight month in December. The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) showed that China's factory activity contracted for the 10th straight month in December, and at a sharper pace than in November.
With no major data releases scheduled for the Asian region, all eyes will yet again be on the performance of Chinese markets on Tuesday. The Aussie, seen as a proxy to the outlook for the Chinese economy, was not immune, losing substantial ground against safe haven plays such as the US dollar, Swiss franc and Japanese yen. "
The data provided bears with another reason to sell the Aussie, as a tentative revival took a step back in December," said Sean Callow, foreign-exchange strategist in Sydney at Westpac Banking Corp.
"For now, we can only hope that China's industrial slowdown is stabilizing, since an actual recovery still appears to be over the horizon. There is definitely broad USD strength." Also, on Monday China cut the yuan's value against the greenback, making it weaker than 6.5 for the first time in more than 4-and-a-half years, with pressure mounting on the world's No. 2 economy from a growth slowdown.
In the US session ADP Employment Change, Trade Balance figures as well as FOMC Meeting Minutes are scheduled for a release. Private sector employment is expected to increase by 193,000, while trade balance deficit should remain relatively unchanged at $44.0 billion. FOMC Minutes from the meeting where interest rates were rose should bring additional volatility by the end of the session.
Figures to watch:
ADP Non-Farm Employment Change (Wednesday 14:15)
Trade Balance (Wednesday 14:30)
FOMC Meeting Minutes (Wednesday 20:00)
