China Federation of Logistic and Purchasing will release April month’s official PMI numbers around 01:00 GMT on Thursday. Aussie traders will be particularly interested in watching how the largest customer’s key activity numbers sustain recoveries from the coronavirus shockwave.
Market consensus signals the headline NBS Manufacturing PMI to pull back to 51.00 from 52 while the Non-Manufacturing PMI registered 52.3 during March.
Ahead of the data, TD Securities said:
We expect a slight softening to around 50 in April from 52.0 previously, as some of the enthusiasm fades. Weakness in Q1 activity culminated in a 6.8% y/y decline in Q1 GDP and recovery is likely to be patchy. Strict health controls remaining in place in much of the country and the worsening exports and jobs outlook are likely to continue to weigh on activity. Already there has been some loss of momentum in high-frequency indicators. Although the overall manufacturing PMI is likely to remain in expansion this month (barely) helped by upstream sectors, as well as infrastructure and construction, expect continued weakness in both export and imports components. The non-manufacturing PMI is unlikely to fare much better given continued health restrictions and continued consumer caution.
On the other hand, analysts at Westpac mentioned:
At 11 am Syd/9 am local we see the official China PMIs. The manufacturing index fell as low as 35.7 in Feb but rebounded to 52.0 in Mar. The consensus on Apr is 51.0. The non-manufacturing PMI sank to 29.6 in Feb then was back to 52.3 in Mar, with a similar reading expected in Apr. Both would be consistent with moderate economic growth.
How could they affect AUD/USD?
Given the latest recoveries in the Chinese fundamentals, mainly due to its comeback from the pandemic, any more positives can offer additional strength to the Aussie’s run-up around multi-day high. However, a surprise weakness, as anticipated widely, could offer the much-needed pullback to antipodeans.
Technically, 100-day SMA near 0.6570 is still standing tall to challenge the buyers to target a 200-day SMA level near 0.6685. Though, sellers will refrain entries unless breaking mid-month high close to 0.6445/40.
Key Notes
AUD/USD extends post-FOMC gains to cross 0.6550, fresh seven-week high, China PMIs eyed
AUD/USD Forecast: Bulls continue to lead, Chinese data in the way
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 an 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 the 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.
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