- China’s manufacturing activity grew at the quickest rate in more than a decade.
- US consumer confidence came in weaker-than-expected, showing the effects of high rates.
- Australia’s economy expanded at its slowest rate in a year in the most recent quarter.
Today’s AUD/USD price analysis is bullish. The Australian dollar, frequently used as a liquid substitute for the yuan, recovered from a two-month low of $0.6695 earlier in the session after data revealed that China’s manufacturing activity grew at the quickest rate in more than a decade in February.
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According to numbers from the National Bureau of Statistics, China’s official manufacturing purchasing managers’ index (PMI) for February was 52.6 as compared to 50.1 in January. This result exceeded expectations as production soared after COVID-19 limitations were lifted late last year.
At the same time, weaker-than-expected figures on US consumer confidence may have given rise to some optimism that rate hikes are beginning to bite and may soon reach their peak. This allowed the Aussie to rise.
Australia’s economy expanded at its slowest rate in a year in the most recent quarter as growth in trade was offset by rising interest rates and high inflation, and all indications point to further slowing in the coming quarters.
If trade hadn’t made such a significant contribution, the economy would have shrunk in the December quarter as rising prices reduced consumer purchasing power and discouraged them from saving. Real gross domestic product (GDP) increased by 0.5% in the December quarter, compared to a 0.7% increase in the prior quarter and less than the 0.8% forecasted growth, according to numbers from the Australian Bureau of Statistics on Wednesday.
AUD/USD key events today
Investors are expecting the US ISM Manufacturing Purchasing Managers Index (PMI). This value is expected to rise from the previous 47.4 to 48.0.
AUD/USD technical price analysis: Bears show weakness at the 0.6700 level
The 4-hour chart shows AUD/USD trading slightly below the 30-SMA. This follows a bounce from the 0.6700 support level after two failed attempts to break below. The price is in the downtrend as it trades below the 30-SMA with the RSI below 50.
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However, the RSI is weak at 0.6700 support as it has made a bullish divergence. If this bullish divergence plays out, bulls will break above the 30-SMA.
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Saqib Iqbal
