Australian dollar off 5-year low ahead of China PMI

The Australian dollar gained a few points over the last few days of 2014, helped by value buying at the 5-year low hit during the month.

On Wednesday, a few hours ahead of the China manufacturing PMI, the Aussie dollar was trading at a 2-week high of 0.8214 against the greenback, further distancing from the 23 December low of 0.8084, which was its lowest since January 2010.

Some analysts predict the operating conditions of manufacturers in China will worsen in December and the PMI reading will fall below the no change level of 50.

The Australian dollar is highly sensitive to data from China, which is the most important trading partner of Australia.

With domestic data through 2014 mostly on the dovish side and with a sharp slide in commodity prices, the Aussie dollar is set to end the year more than 9% weaker from 2013 end levels.

The local dollar was in fact mostly higher in the first half of the year but the more than 14% slide in the second half has made it end weaker by such a big margin.

An IBTimes UK technical analysis shows that the pair is likely to fall to as low as 0.70 in 2015.