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AUD/USD Unfazed After China PMI Data Impresses Ahead of National People’s Congress

AUD/USD Unfazed After China PMI Data Impresses Ahead of National People’s Congress

Thomas Westwater,
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Australian Dollar, AUD/USD, China PMI, NPC, PBOC, Yuan - Talking Points

  • Australian Dollar unfazed after China PMI factory and services data impresses
  • Chinese Yuan strengthens versus USD but remains near the lowest since April 2018
  • AUD/USD looks primed to move higher to challenge the 2022 high and 200-day SMA
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The Australian Dollar was relatively unfazed after China’s National Bureau of Statistics (NBS) reported the country’s manufacturing sector managed to avoid contracting in February. The NBS manufacturing purchasing managers’ index (PMI) crossed the wires at 50.2, beating the 49.8 consensus forecast, according to a Bloomberg survey. The non-manufacturing (services) PMI unexpectedly rose to 51.6 from 51.1, surprising the Bloomberg estimate of 50.7. The Aussie Dollar typically acts as a reactionary gauge to high-impact events out of China due to Australia’s large volume of trade with China.

Analysts expected the 2022 Olympic Games in Beijing to weigh on China’s economy amid emission curbs around Beijing for it, along with the week-long Lunar New Year holiday earlier this month. The upbeat figures point to a robust recovery aided by China’s effort to boost growth following last year’s property sector crisis, which is still dragging on the economy. A rollback in Covid restrictions, particularly in industry-heavy port cities, looks to be a main driver for the strong PMI figures.

China is set to kick off the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) later this week in Beijing. Those meetings will see major policy developments regarding China’s economy and trade, including updated GDP targets and a possible shift in its “Covid Zero” strategy. In any case, markets expect to see more fiscal and monetary support offered to boost China’s domestic economy in the coming months. The People’s Bank of China (PBOC) has cut several benchmark lending rates, and new Yuan loans – a measure of domestic bank lending – hit the highest on record earlier this year.

Meanwhile, the Yuan remains near its strongest level since April 2018, although USD/CNH is moving slightly higher after the PBOC released a weaker-than-expected fixing against the Greenback this morning. China’s Yuan has behaved similarly to a haven currency this week amid the conflict in Ukraine. That may be explained by the Chinese government’s decision not to condemn or levy sanctions on Russia, giving China some insulation against the collateral damage being inflicted on the Russian economy.

AUD/USD Technical Forecast

AUD/USD broke above its 100-day Simple Moving Average (SMA) overnight after defeating trendline resistance. The 2022 high at 0.7314 and the falling 200-day SMA could offer the next test for bulls if momentum carries forward. Alternatively, a turn lower may see the 78.6% Fibonacci retracement and the 100-day SMA offer support.

AUD/USD Daily Chart

audusd china pmi Feb

Chart created with TradingView


--- Written by Thomas Westwater, Analyst for

To contact Thomas, use the comments section below or @FxWestwater on Twitter

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