Surprising the market, Chinese manufacturing activity actually picked up in the month of October.  The new report, out today, showed an uptick in the country’s output rate, the first in in 4 months.  According to the HSBC Flash Manfacturing, survey readings jumped to 51.1 versus September’s final reading of 49.9.

The pickup in output was highly supported by robust demand from emerging market economies, helping to balance out deeper declines in both the United States and Europe.  Gains in domestic demand additionally helped the overall positive  survey readings as well as upticks in the new orders component.  The report further showed that input prices stabilized in the month – supporting earlier reports of the country’s consumer prices.  Annual inflation in the month of September actually rose 6.1%, less than estimates of 6.2% – and far below the 5-year price peak in July 2011.  For the record, the output report’s price subindex fell to a reading of 54.3 from last month’s 58.8 reading.

All in all, the report injects some confidence in the market of a stabilized Chinese economy.  This is contrary to some in the market who continue to speculate of a hard landing in one of the world’s fastest growing economies.

As such, the AUDUSD currency pair has continued higher from Friday’s trade.  Since the open, the Australian dollar has gained by 0.43% to trade at 1.0395 in the Asian session.