China’s official purchasing managers’ index for May surprised to the upside by scoring 50.8 points instead of dropping below the 50 points mark as expected. The outcome was also better than the previous month, and both the new orders and the new export index surprised to the upside.
This was enough to send AUD/USD in early trade: above 0.9580 resistance and then up to 0.9650. However, the Aussie has (at least) 4 reasons to continue falling:
- This indicator is the Chinese official PMI and therefore is suspected to be positive. The unofficial, ye highly regarded HSBC / Markit which dropped below the 50 mark.
- Bad press continues weighing on the Aussie: this time it was BNY Mellon who reported the selling of Aussie on “every day. The Aussie has been pressured by a big bout of negative press.
- Australian retail sales for April disappointed by rising only 0.2%. A rise of 0.3% was expected after the drop of 0.4% in March.
- ANZ Job Advertisements dropped by 2.4% in May. This is sometimes seen as a hint towards the official job figures.
AUD/USD is now trading a bit below the highs, at 0.9627. 0.9580 remains support. 0.97 is distant resistance, while 0.9527 is distant support.
The RBA will make its rate decision on Tuesday at 4:30 GMT. No change is expected after the central bank already cut the rate to a new post-crisis low of 2.75% last month. Why is the RBA expected to stay on hold? One of the reasons is the progress seen in the Aussie: it is falling.
For more, see the AUDUSD weekly forecast. Here is a live chart of the pairGet the 5 most predictable currency pairs