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There is no respite for the Australian dollar. After it already lost the 0.97 line on Bernanke’s testimony, it followed by extending its falls as the HSBC/Markit Manufacturing PMI dropped into contraction territory

AUD/USD fell as low as 0.9625 before bouncing. On the way, it broke support at 0.96. The pair is now approaching the lows of 2012.

The preliminary read from HSBC and Markit on the Chinese manufacturing sector was expected to show a score of 50.5 points, a tick higher from 50.4 seen in the previous month.

AUDUSD Extends Falls on Chinese HSBC Manufacturing PMI May 23 2013 technical outlook weekly chart

However, the score dropped to 49.6 points. This may seem like a small drop, but the fall below 50 points is significant: the 50 point level separates growth from contraction. A slip into contraction is worrying as China is Australia’s No. 1 trade partner.

And news outside the mining sector isn’t that good either. In addition, Ford announced it will be closing two automotive factories in Australia. This seems to be a response to the strength of the Australian dollar, that makes production in Australia less competitive.

AUD/USD

Further support appears around the round number of 0.96. Looking closer, the low of June 2012 is at 0.9580, and breaking this line will probably be harder. Below this line, there are levels last seen in late 2011.

For more levels, events and analysis, see the AUD/USD forecast. Here is a live chart of AUD/USD:

[do action=”tradingviews” pair=”AUDUSD” interval=”60″/]

More in Australia: the Melbourne Institute’s Inflation Expectations now stand at 2.3% after 2.2% last month.