Some strong data out of China

Chinese Manufacturing Jumps: AUD Follows

Posted Monday, September 2, 2019 by
Rowan Crosby • 2 min read

There are some signs of life for the Chinese manufacturing sector after the private data showed an expansion.

The China Caixin/Markit Manufacturing PMI for August came in at 50.4 vs the expected 49.8. Above 50 is a sign that the sector is expanding, which is something that we haven’t always been seeing recently.

There was a fair bit of interest in this number today, on the back of the US-China tariffs ramping up over the weekend and also the fact that Trump and Xi have been throwing barbs recently while little progress appears to be forthcoming.

The news has also helped turn around the risk trade a little, which was in serious trouble to open the asian session. The AUD/USD in particular has bounced back after sitting in the red early on.

If the Aussie can’t bounce on the back of this data then things are going to get messy I feel. We are already getting very close to testing yet another key support level, this time at 0.6700.

There are also a number of big data points out this week that we need to consider. Of course there is the RBA, which we are all expecting to show no change to official interest rates.

However, the interesting ones might well be GDP and Retail Sales. I mentioned earlier today, that retail sales are expected to see a bit of a lift from tax cuts that came into effect a few months go and saw citizens get a bonus of sorts.

The more worrying one could be GDP. Even the PM has come out today and said he expects the number to be soft. The expectation is for 0.5% for the quarter, which while not terrible, is still of the pace to some degree.

In the short-term, the Aussie doesn’t look like it is going to be able to hold the bounce, so that could be a bearish sign for the rest of the session.

AUD/USD – 240min.
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