Chinese Caixin Flash Manufacturing PMI 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, and 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 index has been unable to break the 50-point level since February, pointing to ongoing contraction in the manufacturing sector. The index slipped to 47.1 points in August, short of the forecast of 48.1 points. The estimate for August calls for a slight improvement, with an estimate of 47.6 points.
Sentiments and levels
The Aussie managed to rise for a second straight week, buoyed by the Fed’s decision not to raise interest rates. Still, the Australian economic picture is not as rosy as that of the US, and if the Chinese crisis worsens, the Aussie could get hit hard. So, the overall sentiment is bullish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7284, 0.7213, 0.7160, 0.7100, 0.7060 and 0.7000.
5 Scenarios
- Within expectations: 43.0 to 51.0: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 51.1 to 55.0: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 55.0: 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.
- Below expectations: 39.0 to 42.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
- Well below expectations: Below 39.0: A sharp contraction could hurt 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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