AUD/USD: Trading the HSBC Chinese Flash PMI Feb 2015

The HSBC 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

Traders should pay close attention to this key release, as China is Australia’s number one trading partner, and an unexpected reading can quickly affect the direction of AUD/USD.

The past two releases have pointed to contraction in the manufacturing sector, with readings below the 50-point level. Little change is expected in the February reading, with an estimate of 49.6 points.

Sentiments and levels

Although the RBA remains concerned about health of the economy, recent strong job releases point to an upside for growth and a stronger Aussie. In the US, recent numbers have been lukewarm of late, but the markets continue to bank on a rate hike sometime in 2015. So, the overall sentiment is neutral on AUD/USD towards this release.

Technical levels, from top to bottom: 0.8313, 0.8150, 0.7978, 0.7799, 0.7601  and 0.7403.

5 Scenarios

  1. 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.
  2. Above expectations: 53.1 to 57.1: An unexpected higher reading can send the pair above one resistance line.
  3. Well above expectations: Above 57.1: Given the current trend, the likelihood of a sharp expansion is low. Such an outcome would push the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: 43.0 to 45.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
  5. Well below expectations: Below 43.0: A very poor reading could impact 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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