AUD/USD gains on upbeat China factory gauge reading

The Australian dollar traded up against its US namesake on Thursday after a Chinese manufacturing index surprised on the upside. The first positive sign that China's economy is heading in the right direction emerged on Monday, pushing the Australian dollar higher on hopes that the Australian economy will benefit from stronger demand from the world's second-biggest economy.

China's manufacturing Purchasing Managers' Index (PMI) rose from 49.7 in August to 49.8 last month, coming in higher than the market forecast of 49.7.

Another Chinese manufacturing gauge released on Thursday, which is based on private factories rather than state-run factories, hit a six-and-a-half year low last month. The Caixin-Markit PMI fell from 47.3 to 47.2 in September, but beat the forecast of 47.0.

The AUD/USD pair traded 0.55% higher at $0.7053 on Thursday afternoon in Sydney, up from $0.7015 where the pair closed in New York overnight.

We prefer to take long position on AUDUSD, Entry $0.7035, Stop loss $0.6902 and Target $0.7157 levels.