Home Forex Analysis And Forecasts AUD/USD: Trading the Chinese Flash Manufacturing PMI

AUD/USD: Trading the Chinese Flash Manufacturing PMI

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.

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 posted three straight readings above the 50-point level, which separates between contraction and expansion. The previous reading was 50.3 points, which was shy of the estimate of 51.5 points. Little change is expected in the August release, with the forecast standing at 50.0 points.

Sentiments and levels

The US dollar continues to enjoy strong gains and the Aussie has slipped below the psychologically significant 0.90 line. Will the shaky Australian dollar continue to tumble? The FOMC statement helped the greenback, and the guessing game as to the timing of a rate hike will soon heat up. In Australia, the RBA appears disinclined to adjust rates, despite loud rumblings about the high value of the Australian dollar. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.9175, 0.90, 0.8891, 0.8763, 0.8550 and 0.8316.

5 Scenarios

Within expectations: 48.0 to 52.0: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.

Above expectations: 52.1 to 56.0: An unexpected higher reading can send the pair above one resistance line.

Well above expectations: Above 56.1: 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.

Below expectations: 44.0 to 47.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.

Well below expectations: Below 44.0: A very poor reading could impact on the Australian dollar ,and push the pair below a second support level.

Published On Mon, Sep 22 2014, 10:24 GMT

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