We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bullish
More View more
Real Time News
  • Another failure Boris!
  • RT @vtchakarova: British PM Johnson says won't negotiate further Brexit delay with EU. The EU also made it very clear (see Juncker’s recent…
  • How will the Trump impeachment process affect #forex and US stocks? Find out from Rupert Osborne, @IG_US, only on Trading Global Markets #podcast. Missed the episode? Read up here: https://t.co/1Bgo0Fl5CV https://t.co/BRNvqHVjYY
  • RT @bbclaurak: I'm told that's the advice from Cabinet Secretary - legal default is still leaving at end of this month, because they can't…
  • RT @bbclaurak: No 10 claims chances of no deal go up if Letwin passes - 'the govt will step up no deal preparations immediately as the risk…
  • RT @NSoames: I shall vote against The Letwin amendment and for the Deal
  • RT @Robert___Harris: On the eve of tomorrow’s rushed Commons vote I keep thinking of the journalist Phillip Knightley’s memo to the executi…
  • The $AUD has wilted as markets price in further rate cuts even as the OCR hovers at just 1%. Those cuts may come, but labor market strength may have to wane first. Get your market update from @DavidCottleFX here: https://t.co/h1Uvm8ogXh https://t.co/M1IP0jqh41
  • The inside bar pattern occurs regularly within the financial markets. Incorporating the inside bar strategy within a trading system can enhance a trader’s market analysis technique. Find out how you can use it from @WVenketas here: https://t.co/E3EWOYTYNw https://t.co/ZCT4pwc6nv
  • Greed has proven to be a hindrance more than assistance for traders. How does greed impact your trading? Find out from @RichardSnowFX here: https://t.co/aT8TZjlFqP https://t.co/C4vrTm69sE
Slowdown in China PMI to Keep AUDUSD Under Pressure Ahead of RBA

Slowdown in China PMI to Keep AUDUSD Under Pressure Ahead of RBA

2019-05-30 23:30:00
David Song, Currency Strategist
Share:

Trading the News: China Manufacturing Purchasing Manager Index (PMI)

Updates to China’s Purchasing Managers Index (PMI) may keep AUD/USD under pressure ahead of the Reserve Bank of Australia (RBA) meeting on June 4 as the gauge is expected to indicate a contraction in manufacturing activity.

Image of DailyFX economic calendar

A PMI reading below 50 warns of a potential slowdown in the sector as business sentiment wanes, and the weakening outlook for the Asia/Pacific region may produce headwinds for the Australian dollar as it puts pressure on the Reserve Bank of Australia to further insulate the economy.

In turn, a print of 49.9 may generate a bearish reaction in AUD/USD as it fuels bets for an imminent RBA rate-cut, and Governor Philip Lowe & Co. may continue to strike a dovish tone in the second half of 2019 as the U.S. China, Australia’s largest trading partner, struggle to reach a trade deal.

In contrast, an above-forecast PMI print may keep AUD/USD in its current range as it encourages the RBA to retain a wait-and-see approach for monetary policy.

Impact that China’s PMI had on AUD/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

APR

2019

04/30/2019 01:00:00 GMT

50.5

50.1

-21

-20

April 2019China Manufacturing Purchasing Manager Index (PMI)

AUD/USD 5-Minute Chart

Image of audusd 5-minute chart

China’s Manufacturing Purchasing Managers Index (PMI) unexpectedly narrowed to 50.1 from 50.5 in March, with gauge for service-based activity highlighting a similar dynamic as the figure slipped to 54.3 from 54.8 during the same period. As a result, the Composite PMI fell to 53.4 in April from 54.0 the month prior.

The Australian dollar struggled to hold its ground amid the weakening outlook for the Asia/Pacific region, with quickly pulling back from a high of 0.7069 to close the day at 0.7047. Learn more with the DailyFX Advanced Guide for Trading the News.

AUD/USD Rate Daily Chart

Image of audusd daily chart

  • Keep in mind, the AUD/USD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.7130), with the exchange rate marking another failed attempt to break/close above the moving average in April.
  • In turn, AUD/USD remains at risk of giving back the rebound from the 2019-low (0.6745) as the wedge/triangle formation in both price and the Relative Strength Index (RSI) unravels, with the Fibonacci overlap around 0.6850 (78.6% expansion) to 0.6880 (23.6% retracement) still on the radar the exchange rate struggles to push back above the 0.6950 (61.8% expansion) pivot.
  • Next downside hurdle comes in around 0.6730 (100% expansion), but will keep a close eye on the RSI as the oscillator bounces back from oversold territory, with the development raising the risk for a larger rebound in the aussie-dollar exchange rate.

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide.

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader series on how to effectively use leverage along with other best practices that any trader can follow.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.