AUD/USD: Trading the Chinese Caixin PMI Sep 2015

Chinese Caixin Flash Manufacturing PMI 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, and 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 Wednesday 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.

The index has been  unable to break  the 50-point level since February,  pointing to ongoing contraction in the manufacturing sector. The index  slipped to  47.1 points in August, short of the forecast of 48.1 points. The estimate for  August  calls for a  slight improvement, with an estimate  of 47.6 points.

Sentiments and levels

The Aussie managed to rise for a second straight week, buoyed by the Fed’s decision not to raise interest rates. Still, the Australian economic picture is not as rosy as that of the US, and  if the  Chinese crisis  worsens, the Aussie could  get hit hard. So, the overall sentiment is  bullish on AUD/USD towards this release.

Technical levels, from top to bottom: 0.7284, 0.7213, 0.7160, 0.7100, 0.7060  and 0.7000.

5 Scenarios

1. Within expectations: 43.0 to 51.0: In such a case, AUD/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations:  51.1 to 55.0: An unexpected higher reading can send the pair above one resistance line.
3. Well above expectations: Above  55.0: 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:  39.0 to 42.9: A sharper decrease than forecast could push AUD/USD downwards and break one level of support.
5. Well below expectations: Below 39.0: A  sharp contraction  could hurt  the Australian dollar and push the pair below a second support level.

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

To follow this event live:    [do action=”calendar-event” eventid=”80b0adcf-cfa9-4583-9d3a-f720a4a3f5fa”/]