Why is AUDUSD eerily calm amid upbeat Chinese and Australian PMI data?
The AUDUSD pair is little changed today even after the upbeat economic data from the country. As at 06:10 GMT, the pair is trading at 0.6893, about 15 basis points from the yesterday’s close. What is moving the AUD/USD pair today?
China manufacturing PMI rebound
China is the biggest Australian trading partner. The country buys more than 70% of all Australian goods, including iron ore and coal. Also, Chinese are important players in Australia. They buy vast real estate in the country. Most importantly, wealthy Chinese send their children to the country for studies. Therefore, the Chinese PMI numbers are important for the Australian economy and the AUD/USD pair.
The latest number of Caixin and Markit showed that the country’s manufacturing PMI rose to 51.2 in June from the previous 50.7. This marked the fourth straight month of improvement of the manufacturing sector. This number is usually more credible than the one released by China Logistics yesterday. That is because it is usually standard around the world because it is carried out by Markit.
Therefore, the better PMI sends a signal that business activity in China, and Australia in extension is improving.
Australia manufacturing PMI gains
The AUDUSD pair also reacted to the upbeat manufacturing PMI number from Australia. According to Australia Industry Group, the manufacturing index rose to 51.5 in June from the previous 41.6. This was the best number released this year. Similarly, the PMI number of Commonwealth Bank and Markit showed that the PMI jumped to 51.2 from the previous 44.0.
These numbers show that business activity in the country is returning to normal as it reopens. It has been helped by the falling number of coronavirus cases in the country and in the neighbouring New Zealand.
However, the AUDUSD is probably little changed because of two reasons. First, investors are possibly worried about the rising number of coronavirus cases in the United States and its impacts to Australia. Second, the AUDUSD pair has the USD influence. And the USD is relatively unchanged as traders wait for the official nonfarm payroll data that will come out tomorrow.
AUDUSD technical analysis
The AUDUSD pair is trading at 0.6897, which is below the June high of 0.7065 and above the low of 0.6778. On the daily chart, this price is above the 50-day and 100-day EMA. Also, it is forming a bullish pennant pattern, which is a bullish continuation pattern. This means that there is an indecision among the bulls and bears. However, because of the continuation pattern, there is a possibility that the price will continue rising as bulls attempt to test the previous high of 0.7065.
On the flip side, a move below 0.6778 will send a signal that bears have prevailed. This will see the price continue falling in a sharp reversal.