AUD/USD treads water in bearish territories ahead of key event week

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  • AUD/USD remains technically bearish at the start of the week.
  • Chinese data could be a supportive factor as the RBA and GDP moves to the fore.

AUD/USD is going to b a key focus in the open this week, with the latest China’s manufacturing PMI surging past market expectations. AUD/USD ended on a bearish note, slipping below a key Fibonacci level in the high 0.67 handle.

Over the weekend, China’s manufacturing PMI recorded its first expansionary print in six months. The data arrived marginally above the benchmark 50-level to 50.2 in November but the news is good news for markets in the open and for the Aussie, with the data beating the 49.3 recorded in the month prior.

“New orders also broke into expansionary territory whilst other components (like new export orders, imports and business sentiment) also improved this month. The non-manufacturing PMI similarly beat surveyed expectations, coming in at 54.4 in November (up from 52.8 in the month prior) whilst the composite PMI was up to 53.7,” analysts at ANZ Bank explained.

Meanwhile, a focus will also be on the latest geopolitical headlines surrounding relations between the US and China. President Trump’s recent signing of the Hong Kong will is a likely thorn in the side for risk on the market and associated-fx. 

“Actions will have any impact on the progress of current trade negotiations and whether the US will go ahead with the scheduled tariff increase on 15 December. A deterioration in negotiations at this point, where the global data pulse and market sentiment has begun to turn after both countries touted the almost-signed ‘phase one’ deal, could dampen the outlook for global growth in the year ahead,” the analysts at ANZ argued. 

RBA and Aussie data move to the fore

In the near term, there will also be a focus on the Reserve Bank of Australia. While the central bank is widely expected to leave rates steady this time around, with just a 10% chance of easing at the December RBA meeting, the Aussie Growth Domestic Produce will then be the next focus. The last quarter could be printing was at 0.3% QoQ and annual growth slowing to 1.5% YoY.

AUD/USD levels

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the daily chart for the AUD/USD pair shows that the pair is bearish, and a bounce would hardly affect the dominant trend:

The 20 DMA is about to cross the 100 DMA, both at around 0.6820, while technical indicators remain within negative levels, the RSI heading firmly south at around 37. The pair has some relevant highs in the 0.6830 price zone and would need to accelerate through this area to start reversing its negative stance. In the shorter term, and according to the 4-hour chart, the technical picture is also bearish, as sellers continue to reject advances around the 20 SMA, while technical indicators maintain their downward slopes within negative territory.

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