FXStreet (Guatemala) – AUD/USD has garnered some demand in a minor recovery, but trades dangerously close to key resistance levels for the bears ahead of key data events taking place in Asia today, starting with Chinese PMI’s. For the last four months, Chinese manufacturing has contracted according to the government’s last factory survey.
Some background and what to expect in Chinese PMI’s
Despite economists expecting October’s PMI to show a pick-up to a reading of 50, the Purchasing Managers’ Index (PMI) showed a reading of 49.8 for last month, unchanged from the previous month. It should be note that a figure below 50 indicates that factory activity contracted.
The sector is affected by the weak recovery in the global economy and downward pressure in the domestic economy and thus the manufacturers still face a severe import and export situation.
This sector is a key sector for the economy and continued sluggishness is holding China’s economy down, while, the most recent growth figures showed the country’s economy growing at a rate of 6.9%, the weakest rate since the financial crisis. Just recently, however, Chinese Premier Li Keqiang said that China was still on track to reach its economic growth target of about 7 percent this year, and the economy was going through adjustments to maintain reasonable medium- to long-term growth However, Chinese President Xi Jinping recently said that China just needs to keep an annual growth at 6.5% in the next five years to hit the country’s goal of doubling 2010 GDP and household income by 2020.
The government has been taking various measures to try and revive growth, including cutting interest rates five times so far this year while also trying to move away from being an export-led economy to a more consumer and services-led one. The Non manufacturing PMI’s are out today at the same time while prior was in positive territory at 53.1. We are also looking out for Caixan/Markit Manufacturing PMI for Nov expected at 48.3 vs prior 48.3 and atthe same time the Caixin Services PMI with prior 52.0. Finally, the Caixan composite PMI came with a prior 49.9.
AUD/USD levels to monitor
0.7250/70 is a key area of resistance. a positive outcome will look to test that level while much of the same slack in the sectors of the economy will leave the aussie under pressure below here with the 0.7170 low is a key target to the downside. A break of there should crystalise the bearish trend for the medium term. The 100 DMA at 0.7197 guards the 0.7170 ahead of the the Sep lows at 0.6907. 0.7015 and 0.6950 supports need to give first.
(Market News Provided by FXstreet)