Chinese Flash Manufacturing PMI (Purchasing Managers’ Index) is based on a survey of purchasing managers in the manufacturing sector. Respondents are surveyed for their view of the economy and business conditions in China. A reading which is higher than the market forecast is bullish for the Australian dollar.
Here are all the details, and 5 possible outcomes for AUD/USD.
Published on Wednesday at 1:45 GMT.
Indicator Background
The Australian dollar is sensitive to key releases out of China, as the Asian giant is Australia’s number one trading partner. So, an unexpected reading can affect the direction of AUD/USD.
The Flash Manufacturing PMI has been losing ground recently, and has dropped below the 50-point level for the past two releases. A reading below 50 indicates contraction. Little change is expected in the upcoming release, with an estimate of 48.6 points.
Sentiments and levels
The Australian dollar showed some improvement early last week, courtesy of the RBA minutes which pointed to a decreased likelihood of an interest rate cut. However, Australian numbers have not impressed, and China has experiencing a slowdown in growth. The Australian dollar is sensitive to Chinese data, as the Asian giant is Australia’s number one trading partner. So, weakness in China could spell trouble for the Australian dollar. Meanwhile, the US economy appears to be on the right track, and the employment picture is stable. Thus, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.9549, 0.9428, 0.9283, 0.9170, 0.9041 and 0.9000.
5 Scenarios
- Within expectations: 46.0 to 53.0: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 53.1 to 57.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 57.0: Such an outcome would push the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: 42.0 to 45.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
- Well below expectations: Below 42.0: A very poor reading could hurt on the Australian dollar ,and push the pair below a second support level.
For more on the Australian dollar, see the AUD/USDAUD/USD.
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