Australian Dollar Gains on Best Caixin PMI Readings in Years
- Australian Dollar gains against its major counterparts in early Thursday trade
- China’s private, Caixin composite and services readings at highest in years
- AUD/USD continues heading higher, rising support line appears to be holding up
The Australian Dollar made a sudden u-turn against its major peers, climbing higher following poor performance during the beginning of Thursday’s trading session. What seemed to be the catalyst? December’s Caixin PMI readings. Keep in mind, readings above 50 show expansion while those below mark contraction.
The services index of China’s private sector clocked in at 53.9 from 51.9 in November, this was the fastest pace of expansion since August 2014. Meanwhile, the composite index recorded at 53.0 which was the best outcome since December 2016.
With China being Australia’ largest trading partner, economic news-flow from the former country often implies knock-on effects on the later, triggering a response from the currency. While the RBA seems to be in no rush to raise rates, the markets are pricing in a 70 percent chance that one could be upon us by the end of 2018.
On a daily chart, AUD/USD continues shooting for the stars since bottoming out on December 8th. The pair seems to be supported by a near-term rising trend line that has yet to be broken. This reversal aligned with a more long-term rising trend line that dates back to early 2016.
A continued push puts the 61.8% Fibonacci retracement at 0.7887 in sight followed by the 76.4% level at 0.7978. If Aussie Dollar turns lower and falls below near-term rising support, the 38.2% Fibonacci retracement at 0.7739 will be exposed followed by the 23.6% level at 0.7648.
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