Release Explanation: The Australian AIG Manufacturing Index (services and manufacturing) is a seasonally adjusted composite index based on the diffusion indexes for production, new orders, deliveries, inventories and employment. Each category has its own weight correspondent to its effect on the economy.
The release is a closely watched figure for signs of future economic growth. Stronger numbers may lead to revaluations of a stronger currency and vice versa. Currency markets can swing confidently on this release.
Trade Desk Thoughts: The manufacturing sector in Australia has fallen to 31.7 in February from the previous reading of 36.6 in January. This is the ninth consecutive monthly decline for manufacturing activity in Australia, although the rate of decline has eased slightly from the low seen in November of 2008. Manufacturing has contracted at a record pace as companies face fewer orders and have had to let workers go amid the global slump. This is the lowest level seen since the index first started in 1992. There is speculation that the Australian economy is on the brink of following the U.S., Euro-zone, and Japan into a recession. Reserve Bank of Australi governor Glenn Stevens has hinted that the bank will lower interest rates tomorrow for the sixth time in the past seven months.
Forex Technical Reaction: The aussie is currently trading at .6368 after this release and was quickly rejected from the neutral pivot point as the markets awaken throughout the world in the next couple hours.