AUD/USD – Steady as Chinese Manufacturing PMI Meets Expectations

AUD/USD is steady, at the start of the week, as the pair trades in the low-0.78 range in the North American session. Taking a look at today’s releases, Australian Commodity Prices continues to post sharp declines. Chinese Manufacturing PMI remained steady at 49.7 points. In the US, ISM Manufacturing PMI continued to soften, slipping to 53.5 points.

Chinese HSBC Final Manufacturing PMI showed little change in January, coming in at 49.7 points. This almost matched the forecast of 49.8 points. A reading below 50 points to contraction, so further weak readings from this PMI could weigh on the Aussie. The Australian currency is sensitive to key Chinese indicators, as China is Australia’s number one trading partner.

Australian inflation indicators continue to point to weak inflation levels. Last week, the Producer Price Index edged down to 0.1%, short of the forecast of 0.3%. Earlier in the week, Australian CPI, the primary gauge of consumer inflation, dropped to just 0.2% in Q4, shy of the forecast of 0.3%. This was the index’s weakest gain in two years. However, there was much better news from Trimmed Mean CPI, which posted a strong gain of 0.7%, beating the estimate of 0.5%.

On Friday, US Advance GDP for Q4 disappointed, posting a gain of 2.6%. The markets had anticipated a gain of 3.0%. Still, market sentiment towards the US economy remains positive, underscored by the Federal Reserve statement last week, where the Fed noted solid growth in the economy. The Fed remains on track to raise rates later in 2015, and the dollar will likely benefit as speculation continues over the timing of a rate hike.

AUD/USD for Monday, February 2, 2015

AUD/USD February 2 at 15:20 GMT

AUD/USD 0.7818 H: 0.7829 L: 0.7766

AUD/USD Technical

• AUD/USD has shown little movement on Monday. The pair continues to put pressure on support at 0.7799.
• 0.7799 is a weak support level and could break during the North American session. 0.7684 is stronger.
• 0.7904 is a strong resistance line.
• Current range: 0.7799 to 0.7904

Further levels in both directions:

• Below: 0.7799, 0.7684, 0.7582, 0.7403 and 0.7265
• Above: 0.7904, 0.8081, 0.8150 and 0.8214

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short long positions on Monday. This is not consistent with the movement of the pair, as the Aussie has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD moving higher.

AUD/USD Fundamentals

• 5:30 Australian Commodity Prices. Actual -20.4%.
• 13:30 US Core PCE Price Index. Estimate 0.0%. Actual 0.0%.
• 13:30 US Personal Spending. Estimate -0.1%. Actual -0.3%.
• 13:30 US Personal Income. Estimate 0.2%. Actual 0.3%.
• 14:45 US Final Manufacturing PMI. Estimate 54.1 points. Actual 53.9 points.
• 15:00 US ISM Manufacturing PMI. Estimate 54.9 points. Actual 53.5 points.
• 15:00 US Construction Spending. Estimate 0.9%. Actual 0.4%.
• 15:00 US ISM Manufacturing Prices. Estimate 40.1 points. Actual 35.0 points.

*Key releases are highlighted in bold

*All release times are GMT

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