- AUD/USD is looking for an immediate cushion around 0.6800 ahead of Caixin Manufacturing PMI data.
- After scrutiny of the Chinese official PMI and consensus, Caixin Manufacturing PMI is likely to remain downbeat.
- This week, the spotlight will remain on the release of the FOMC minutes.
The AUD/USD pair is looking for demand after dropping to near the round-level support of 0.6800 in the early Asian session. The Aussie asset is displaying some volatility after the release of the S&P Global Manufacturing PMI data. The economic data has dropped to 50.2 vs. the consensus and the prior release of 50.4.
The US Dollar Index (DXY) has yet to return to active mode after the long-truncated week. However, Friday’s action is telling a detailed story. After a consolidation for 15 trading sessions, the USD Index delivered a downside break of the consolidation formed in a range of 103.46-104.57. Carry-forwarded price action on Tuesday might bring more pain to the US Dollar.
Going forward, the Australian Dollar is likely to display sheer volatility due to the release of the Caixin Manufacturing PMI data. The expression from consensus indicates a decline in the Manufacturing PMI to 48.8 vs. the former release of 49.4. Also, the observation from the reading of official Chinese Manufacturing PMI data indicates a decline in the extent of manufacturing activities. Official China’s Manufacturing PMI data dropped to 47.0 vs. the expectations of 49.2 and the former release of 48.0.
A decline in the extent of Manufacturing PMI in China could be the outcome of a spike in Covid-19 cases after reopening measures taken by the Chinese administration to put the economy back on track. It is worth noting that Australia is a leading trading partner of China and a higher-than-anticipated PMI might support the Australian Dollar.
On the United States front, investors will keep an eye on the release of Thursday’s Federal Open Market Committee (FOMC) minutes. The minutes from December’s monetary policy by the Federal Reserve (Fed) will provide a detailed explanation behind hiking interest rates by 50 basis points (bps).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.