When are China’s official PMI and Aussie CPI data and how could they affect AUD/USD?

Early on Wednesday, China Federation of Logistic and Purchasing will release July month’s official Purchasing Manager Index (PMI) numbers around 11 am Sydney/01am GMT. The same will be followed by the second quarter (Q2) Consumer Price Index (CPI) from the Australian Bureau of Statistics with a scheduled release on 01:30 GMT. Considering the high importance that both the catalysts carry for the AUD/USD pair, traders will be keenly observant of the outcome for fresh Aussie moves.

Expectations favor mild improvement in the data with China’s Manufacturing PMI likely inching up from 49.4 to 49.6 while Non-Manufacturing PMI is expected to rise from 54.2 to 54.5. Elsewhere, Australia’s Q2 CPI may increase to 0.5% from 0.0% on a QoQ basis whereas Reserve Bank of Australia’s (RBA) Trimmed Mean CPI could inflate from 0.3% to 0.4% on the quarterly basis.

TD Securities also follows market consensus while saying:

Sentiment among manufacturers likely improved in July but not enough to move back into expansion. We expect the (China Manufacturing) PMI to edge higher to 49.9 in July from 49.4 in June, as the impact of the US-China trade truce filters through. Also despite a weak Q2 GDP outcome, activity indicators picked up momentum in June, which likely carried through into July amid ongoing easy liquidity and phased cuts in the RRR for small and medium-sized companies.

We look for headline CPI to gain 0.6% q/q in Q2, pushing the y/y rate to 1.6% (mkt: 0.5% q/q and 1.5% y/y). Rising oil prices over the quarter is the main driver, and a pick-up in annual private healthy premiums, rising airfares, and the increase in tobacco excise support upside risks. Our forecast for core inflation at 0.4% q/q and 1.5% y/y is in line with both consensus and the RBA's forecasts, so has limited market implications.

How could they affect AUD/USD?

While recent doubts over the US-China trade deal and RBA’s dovish bias already weighs over the Aussie, any further deterioration in the key statistics wouldn’t be welcomed by the AUD/USD pair buyers. It should also be noted that upbeat prints are also likely not to have a near-term bullish impact on the pair, unless being extremely high, as markets await details from Shanghai trade talks and today’s Fed meeting.

Technically, June month bottom close to 0.6830 becomes nearby support to watch during the pair’s further declines while a pullback, considering the oversold condition of 14-day relative strength index (RSI), can recall early-month low surrounding 0.6910.

Key Notes

AUD/USD seesaws around 6-week low ahead of China PMI, Aussie CPI

AUD/USD Analysis: extremely oversold, correction won’t change trend

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 Non-Manufacturing PMI

The official non-manufacturing PMI, released by China Federation of Logistics and Purchasing (CFLP), is based on a survey of about 1,200 companies covering 27 industries including construction, transport and telecommunications. It's the level of a diffusion index based on surveyed purchasing managers in the services industry and if it's above 50.0 indicates industry expansion, below indicates contraction.

About the Australia Consumer Price Index

The Consumer Price Index released by the RBA and republished by the Australian Bureau of Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services . The purchase power of AUD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or Bearish).