Chinese Flash Manufacturing PMI (Purchasing Managers’ Index) is based on a survey of purchasing managers in the Chinese 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 Friday at 1:45 GMT.
Indicator Background
Market analysts are always interested in the views of purchase managers on the economy, as the latter are considered to be attuned to the latest economic and financial developments, and their expectations could be an indication of future economic trends. Traders should pay close attention to key Chinese releases, as China is Australia’s number one trading partner.
In November, the index rose to 50.4 points. This was the first time the index moved above the 50 point line, which indicates expansion, since October 2011. The forecast for this month stands at 50.5 points. Will the index continue to point towards expansion?
Sentiments and levels
Although the AUD/USD has been marked by range trading during the past month, traders should bear in mind that the aussie has done well, with an impressive rally against the greenback since early October. The Australian dollar has shown some volatility following Wednesday’s announcement by the Federal Reserve of another round of QE, and we could see the aussie improve against the greenback once the markets digest this development. Fiscal cliff remains a wild card, and any progress towards resolving the crisis will likely bolster the aussie. So, the overall sentiment is bullish on AUD/USD towards this release.
Technical levels, from top to bottom: 1.0874, 1.0718, 1.06, 1.0508, 1.0402 and 1.0326.
5 Scenarios
- Within expectations: 47.0 to 53.0: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 53.1 to 56.0: An unexpected higher reading can send the pair well above one resistance line.
- Well above expectations: Above 56.0: The likelihood of a sharp expansion is low. Such an outcome would prop up the aussie, and a second resistance line might be broken as a result.
- Below expectations: 43.9 to 46.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
- Well below expectations: Below 43.9: A reading deep in negative territory would indicate strong contraction in the manufacturing sector. This would likely push the pair downwards, possibly breaking a second support level.
For more about the pound, see the AUD/USD forecast.
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