"The calculation of the expected inflation rate has been revised to correct a downward bias in the previous approach. The measure of consumer expected inflation rate now reported is the 30 per cent symmetric trimmed mean."
-Dr. Viet Nguyen, a Research Fellow at the Melbourne Institute
Thursday provided a relief for those traders, who are still holding long positions on the AUD/USD pair (50% of Dukascopy traders), as stronger-than-expected Chinese manufacturing and higher inflation expectations in Australia pushed the Aussie higher. AUD/USD was trading around 0.9274 level, bouncing back from strong support around 0.92-mark. Technical indicators on a daily and weekly chart are bullish, hence, as long as 0.92 level holds, the outlook will remain bullish.
The main reason for stronger Aussie is a rebound in Chinese manufacturing sector, suggesting the economy is stabilizing. The initial or flash manufacturing PMI climbed to 49.7 in May, accelerating from 48.1 a month earlier and moving closer to the threshold level of 50. The data ease some of the pressure on the policymakers, as latest GDP report raised concern whether the target of 7.5% can be achieved.
Separately, a report from the Melbourne Institute showed that inflation expectations in Australia picked up to 4.4$ in May, from 4.2% a month earlier. More than 72% of respondents believe the inflation rate will fall about 0.5% in May, up from 68.4% in April's survey. Stronger demand from China and higher inflation are all speaking in favour of Aussie's appreciation.
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