AUD/USD: Trading the HSBC Chinese Flash PMI Jun 2015

HSBC 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.

Here are all the details, and 5 possible outcomes for AUD/USD.

Published on Tuesday at 1:45 GMT.

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.

For most of 2015, the index has been below the 50-point level, which separates contraction from expansion. The index showed little movement in May, coming in at 49.1 points. The estimate for the June estimate stands at 49.4 points.

Sentiments and levels

US numbers have been a mix in recent weeks, although Q2 numbers could still end up improving over a dismal Q1. The US economy continues to outperform that of Australia, but the  lack of confidence from Yellen could weigh on the greenback. So, the overall sentiment is neutral on AUD/USD towards this release.

Technical levels, from top to bottom: 0.7978, 0.7901, 0.7798, 0.7692, 0.7601 and 0.7528.

5 Scenarios

1. Within expectations: 46.0 to 53.0: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations:  53.1 to 57.1: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above  57.1: 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.
4. Below expectations:  42.0 to 45.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
5. Well below expectations: Below 42.0: A  sharp contraction  could impact on  the Australian dollar and push the pair below a second support level.

For more on the Australian dollar, see the AUD/USD forecast.

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