Soft Chinese Data to Start 2020: AUD
Rowan Crosby • 1 min read
In what is the first major data point of the year, we’ve seen a little bit of a soft start from China.
Today’s private manufacturing PMI was slightly below expectation at 51.5 vs 51.6.
Earlier in the week, we saw a stronger than expected official PMI and that has helped with the bullish sentiment that we’ve seen.
The risk-on sentiment has been in full flight since the news that US President Trump is looking to sign a phase one deal on January 15. That has seen some sharp USD selling which has been lifting the majors.
The AUD/USD is strong at the moment as a result and has reclaimed the important 0.7000 level.
It is the only official Asian market that is open today as New Zealand and Japan are still away on holidays.
At the moment, the 0.7000 is the one of most interest. What would be interesting would be a slight pullback and retest of that level.
If the buyers hold up, then that would be very bullish for me. The next level ahead would likely be the 0.7050 mark which has been resistance in the past.
Otherwise, there is a fair bit of support below. 0.6900 and 0.6925 have both been pretty strong in the past and that is where I suspect price will get sucked to on a fail of 0.7000.
In some ways, it is a bit hard to tell what might come in early Jan.
We could get some selling after the phase one deal is signed. And we do need to hear more from the RBA before we can really ascertain where the AUD truly sits and that won’t come until February.
Volume is also light at the moment, so these moves are likely being exaggerated.