Forex News
China’s Manufacturing Purchasing Managers' Index (PMI) jumped to 50.4 in March, compared to 49 in February, according to the latest data published by the National Bureau of Statistics (NBS) on Tuesday.
The reading came in much above the market estimates of 50.1 in the reported month.
The NBS Non-Manufacturing PMI rose to 50.1 in March versus February’s 49.5 figure. The market consensus was for 49.9.
Market reaction
At the time of writing, the AUD/USD pair is holding higher ground near 0.6875, up 0.30% on the day.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Tuesday at 6.9194 compared to the previous day's fix of 6.9223 and 6.9209 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- USD/JPY attracts fresh buyers on Tuesday following the release of soft Tokyo CPI print.
- The data tempers BoJ rate hike bets and undermines the JPY amid economic concerns.
- Hawkish Fed expectations lift the USD to a fresh YTD peak and further support the pair.
The USD/JPY pair builds on the previous day's late rebound from the 159.35-159.30 area and gains some positive traction during the Asian session on Tuesday. Spot prices stick to modest gains following the release of softer Tokyo consumer inflation figures, though the uptick stalls ahead of the 160.00 psychological mark.
A government report released earlier today showed that the headline Consumer Price Index (CPI) in Tokyo – Japan's capital city – slowed from the 1.5% in the previous month and rose 1.4% in March, marking the lowest print since March 2022. Adding to this, the core gauge, which excludes volatile fresh food prices, climbed 1.7% during the reported month, compared to 1.8% in February. Moreover, the core CPI that excludes both fresh food and energy costs grew 2.3% in March, down from the 2.5% in the prior month.
The data temper bets for an immediate rate hike by the Bank of Japan (BoJ) amid economic concerns stemming from the Iran war, and undermines the Japanese Yen (JPY). This, along with a bullish US Dollar (USD), acts as a tailwind for the USD/JPY pair. Traders have fully priced out the possibility of any further rate cuts by the US Federal Reserve (Fed) and rapidly increasing bets for a hike by the end of this year amid concerns about the war-driven spike in inflation, pushing the USD to a fresh year-to-date high.
Meanwhile, Japan's Vice Finance Minister for International Affairs, Atsushi Mimura, issued the strongest signal yet on Monday and said that authorities are ready to take decisive action if speculative moves in the currency markets continue. Moreover, BoJ Governor Kazuo Ueda said that the central bank will closely watch FX moves, fueling speculations that authorities would step in to stem weakness in the domestic currency. This holds back the JPY bears from placing fresh bets and caps the upside for the USD/JPY pair.
Economic Indicator
Tokyo CPI ex Food, Energy (YoY)
The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The gauge excluding food and energy is widely used to measure underlying inflation trends as these two components are more volatile. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.
Read more.Last release: Mon Mar 30, 2026 23:30
Frequency: Monthly
Actual: 1.7%
Consensus: -
Previous: 1.8%
Source: Statistics Bureau of Japan
- AUD/USD rises as the Australian Dollar gains support after the RBA March Meeting Minutes.
- The RBA Minutes show policymakers agree on more tightening, but differ on timing.
- Fed Chair Powell says long-term US inflation expectations remain anchored despite Middle East uncertainties.
AUD/USD halts its five-day losing streak, trading around 0.6860 during the Asian hours on Tuesday. The pair advances as the Australian Dollar (AUD) receives support after the Reserve Bank of Australia released its March Meeting Minutes.
The RBA Minutes showed that board members agreed further tightening would likely be needed, but differed on the timing. Oil near $100 per barrel is seen capable of lifting June-quarter CPI to around 5%, with the majority concerned that inflation expectations could become unanchored without prompt action.
Australia’s Private Sector Credit rose by 0.6% month-over-month (MoM) in February, slightly improving from a ten-month low increase of 0.5% in the previous month and in line with market expectations. On an annual basis, private sector credit edged up to 7.8% from 7.7% in January.
The AUD/USD pair also appreciates due to a softer US Dollar (USD) after five consecutive days of gains. However, the Greenback may regain traction amid rising safe-haven demand linked to escalating Middle East tensions, which also raise concerns about potential impacts on inflation and economic growth.
However, Federal Reserve (Fed) Chair Jerome Powell noted on Monday that long-term US inflation expectations remain well anchored despite heightened Middle East uncertainties and emphasized that the Federal Reserve policy stance allows officials to evaluate the economic impact of the Iran conflict.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The Reserve Bank of Australia (RBA) published the Minutes of its March monetary policy meeting this Tuesday, which showed that board members agreed that further tightening would likely be needed.
Additional takeaways:
The board agreed that financial conditions needed to be restrictive.
Members agreed that further tightening would likely be needed, but differed on the timing.
Oil near $100/barrel seen capable of lifting June-quarter CPI to around 5%.
The majority feared inflation expectations could become unanchored without prompt action.
Minority preferred to wait, citing uncertainty around growth, consumption, and labour market risks.
Market Reaction:
The AUD/USD pair remains depressed near its lowest level in over two months, currently trading around the 0.6840-0.6835 region, down 0.20% for the day.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
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