AUD/USD Finding Support at MAs After the Chinese Caixin Manufacturing

AUD/USD made a bullish reversal in early November below 0.62 and has been pushing higher since then, with the price breaking above all moving averages acting as support on the H4 chart. As a result, this pair ended up with another monthly gain in a row, accumulating more than 600 pips of gains until the top.

The rally of the last two months in AUD/USD eliminated the losses it endured earlier last year and the price closed around the same level where it opened 2023. The pair had a bearish bias for most of last year until early November when it rebounded sharply as the sentiment improved on a dovish FED reversal and then accelerated in December after the latest FOMC meeting, which included the rate cut forecasts from policymakers. Jerome Powell referenced rate reduction on that meeting, confirming the market’s expectations that the FED will begin decreasing interest rates as early as Q1 this year.

Another bullish driver for this pair has been the recovery signs we have seen from the Chinese economy recently, which is has been suffering in the last several years, but is improving after the involvement of officials following the summer worry. Late last month we saw some positive numbers from China, with retail sales and industrial production numbers beating expectations. However, the Caixin Manufacturing PMI released earlier today was expected to show a slowdown in December, approaching recession.

Chinese Caixin Manufacturing PMI Report

• Caixin Manufacturing PMI for December 50.8 points vs 50.3 points expected
• November Caixin Manufacturing PMI was 50.7 points

Key findings, in summary, from the report:

• Output and new orders both increase at quicker rates
• firms maintain a cautious approach to employment
• Inflationary pressures remain soft

AUD/USD Live Chart