China Caixin PMI overview
Early Friday at 01:45 GMT will see another round of China’s Caixin Purchasing Manager’s Index, which markets are forecasting to clock in at 50.5, a minor tick lower than the previous reading of 50.6. Domestic conditions in China are beginning to show signs of slowdown as the US-China trade spat continues to worsen, and Antipodean traders will be extra-cautious of any dovetailing data coming out of China.
How could it affect the AUD/USD?
The AUD/USD has recently broken into the next leg of a dominant bearish trend on the Daily candles thanks to declines in metals prices lately, and as Aussie traders already lean into the bearish camp, any missed expectations from China, Australia’s largest trading partner, could see hopes for a bullish recovery vanish, and extend the current slide into 2018’s lows sitting at 0.7085.
Technical indicators for the Aussie-Dollar pairing are also hinting at further downside, and as FXStreet’s own Valeria Bednarik writes, “meanwhile, the pair broke below the 50% retracement of its latest downward move at 0.7225, now the immediate resistance, and the ongoing downward extension sub 0.7250 also leans the scale toward the downside for the upcoming sessions. The 38.2% retracement of the mentioned slide comes at 0.7190, with a break below it further discouraging bulls. In the 4 hours chart, the 20 SMA is currently gaining downward traction above the 200 SMA, both above the current level, while the 100 SMA is directionless a handful of pips below the current level. The Momentum indicator in the mentioned chart remains directionless within negative levels, while the RSI maintains its downward slope around 36, also skewing the risk to the downside.”
Support levels: 0.7190 0.7155 0.7120
Resistance levels: 0.7225 0.7255 0.7300
Key notes
AUD/USD analysis: base metals weighed the AUD
AUD/USD Showing Signs of a Potential Near-Term Top
AUDUSD Analysis: Breakout occurs
About the China Caixin PMI
The Caixin China Manufacturing PMIâ„¢ is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private manufacturing sector companies.
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