Chinese Industrial Production is a key manufacturing indicator. 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 5:30 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.
Chinese Industrial Production has slowed down considerably in the past 12 months, as the indicator was posting gains around the 9% level in the summer of 2014. The March reading slipped to 5.6%, well short of the estimate of 6.9%. The markets are expecting some improvement in the April report, with an estimate of 6.1%.
Sentiments and levels
The RBA cut rates as expected to 2.0%, but the Aussie has held its own despite rates being at record lows. US numbers have been lukewarm, but the markets are expecting the economy to improve in Q2 after a lackluster Q1. So, the overall sentiment is neutral on AUD/USD towards this release.
Technical levels, from top to bottom: 0.8150, 0.8077, 0.7978, 0.7799, 0.7692 and 0.7601.
5 Scenarios
- Within expectations: 5.8% to 6.4%: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 6.5% to 6.9%: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 6.9%: Given the current downward 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.
- Below expectations: 5.3% to 5.7%: A smaller gain than forecast could push AUD/USD downwards and break one level of support.
- Well below expectations: Below 5.3%: A very poor reading could push the pair below a second support level.
For more on the Australian dollar, see the AUD/USDAUD/USD.
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