When are Chinese PMIs and how could they affect the AUD/USD?

Be it official manufacturing and non-manufacturing gauges or Caixin manufacturing survey result, Chinese PMIs are set to take grab the spotlight on early Tuesday. The Federation of logistics and purchasing will release China’s official manufacturing and non-manufacturing purchasing manager index (PMI) numbers at 01:00 (GMT) followed by Caixin manufacturing PMI up for release at 01:45 (GMT).

Markets are forecasting no change of the NBS manufacturing PMI figure of 50.5 versus a bit strong 51.0 marks compared to 50.8 prior release of its private counterpart from the Caixin. In the case of non-manufacturing PMI, a bit softer than 54.8 previous readout to 54.5 might take place.

TD Securities expect a continuation of the recent improvement in China PMI as it says:

We expect China’s official April manufacturing PMI to increase to 50.9 from 50.5 in March. China’s March data dump broadly beat expectations, and revealed that stimulus measures were kicking in. April will likely maintain this constructive tone, with further signs of stabilisation. Forward-looking components of the March CPI such as manufacturing new orders and expected production moved higher. Separately, the US and China continue to edge towards a trade deal. The upturn in electricity output and increased lending also suggest some improvement in manufacturing activity and sentiment.

Though, Westpac seems a bit cautious while expecting consolidation in heading PMIs:

The bounce in China’s manufacturing PMIs in March is a key plank of the narrative of Chinese recovery from a growth slow patch, so there is plenty of interest in the April PMIs, starting with the official manufacturing and non-manufacturing surveys (11am Syd/9am local). Consensus is for consolidation of the March bounce, around 50.5 and 54.9 respectively. The Caixin-sponsored manufacturing PMI (tilted more towards smaller, private firms) is due 45 minutes later, seen at 50.9.

How could it affect the AUD/USD?

The recent recovery in China’s headline data, including PMI, seems to have played positively for the AUD/USD pair despite growing consensus for the Reserve bank of Australia’s (RBA) rate cut. Hence, positive prints from Australia’s largest customer could bode well for the Aussie pair that’s already in the fourth consecutive daily positive region.

Recent optimism surrounding the US-China trade deal and data from China could gain extra strength to propel the AUD/USD towards 0.7055/60 and 50-day simple moving average (SMA) figure of 0.7105 in case of upbeat PMIs. However, any missed expectations might not stop AUD/USD from revisiting 0.7030 and an upward sloping trend-line since January 04 around 0.7005/0.7000.

Key Notes

AUD/USD remains positive around 0.7060 ahead of China PMI

AUD/USD Analysis: bullish case firmer above 0.7070

AUD/USD Technical Analysis: Sluggish below 0.7075 resistance

About the China NBS manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI) released by the China Federation of Logistics and Purchasing (CFLP) studies business conditions in the Chinese manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction. As the Chinese economy has influence on the global economy, this economic indicator would have an impact on the Forex market.

About the China Caixin PMI

The Caixin China Manufacturing PMI™ is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private manufacturing sector companies.