Australian, NZ Dollars Strengthen As China PMI Hits 5-month High

The Australian and NZ dollars climbed against the other major currencies in early Asian deals on Thursday, as the China's HSBC PMI topped forecasts in May, reaching a 5-month high.

The latest survey from HSBC and Markit Economics revealed today that an index measuring manufacturing activity in China came in with a score of 49.7 in May

That topped forecasts for a score of 48.3 and was up sharply from 48.1 in April -and while it does remain below the line of 50 that separates expansion from contraction.

Consumer inflationary expectations in Australia rose by 0.2 percentage points to 4.4 percent in May from 4.2 percent in April, survey by Melbourne Institute showed today.

The Federal Reserve discussed plans to exit stimulus but gave no indication that a rate hike is imminent, the minutes of the most recent Federal Reserve meeting showed Wednesday.

In April, the Fed kept its benchmark rate unchanged at historic low levels near zero and it tapered quantitative easing (QE3) by another $10 billion.

The aussie climbed to 2-day highs of 0.9268 against the greenback, 1.0109 against the loonie and 1.4761 against the euro. The aussie may face resistance around 0.93 against the greenback, 1.02 against the loonie and 1.47 against the euro.

The aussie that ended yesterday's deals at 1.0787 against the kiwi and 93.78 against the yen advanced to 2-day highs of 1.0806 and 94.12, respectively. The next possible upside target for the aussie is seen at 1.09 against the kiwi and 94.5 against the yen. The kiwi hit a 2-day high of 87.17 against the yen, after having touched more than 2-month low of 86.37 yesterday. The next possible upside target for the kiwi lies around 88.00 area.

The kiwi advanced to a 2-day high of 1.5928 against the euro, recovering from an early low of 1.5992. If the kiwi extends its uptrend, it is likely to find resistance around the 1.585 area.

The kiwi rose back to 0.8585 against the greenback, from an early low of 0.8554. The next possible upside target for the kiwi lies around 0.90 area.

Looking ahead, Japan monthly economic report is due at 1:00 am ET.

The PMIs from major European economies are due in the early European session.

In the New York session, the Canadian retail sales data for March and U.S weekly jobless for the week ended May 17, manufacturing PMI for May, existing home sales data and leading indicators for April are set to be released.

At 12:00 pm ET, Bundesbank Chief Jens Weidmann's speech in Frankfurt is due.

The Federal Reserve bank of San Francisco President John Williams speech in San Francisco is due at 4:00 pm ET.

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