China Federation of Logistic and Purchasing will release June month’s official PMI numbers around 01:00 GMT on Tuesday. It should also be noted that the speech from the RBA Deputy Governor Guy Debelle, at 02:30 GMT, becomes an additional catalyst to watch for the AUD/USD pair traders.
Aussie traders will be particularly interested in watching how the largest customer’s key activity numbers sustain recoveries from the coronavirus shockwave. Though, the title of the RBA Deputy Governor Debelle’s speech, “The RBA’s policy actions and balance sheet”, also suggest interesting comments to roll out.
Market consensus signals the headline NBS Manufacturing PMI to soften from the previous 50.6 to 50.4 while the Non-Manufacturing PMI registered 53.6 during May.
Ahead of the data, TD Securities said:
China's manufacturing PMI remained in expansion in May at 50.6 although the trade components remained very weak, which will continue to act as a drag on overall manufacturing activity. We expect a similar outcome for June but look for the PMI to soften to 50.2. We expect some, albeit limited improvements in the exports and imports components. High-frequency indicators such as refinery operating rates have continued to increase, but the overall pace of improvement in activity has slowed as reflected in steel inventories/prices, and passenger transit volumes. Industrial activity is positively helped by housing investment and infrastructure but is losing momentum.
On the other hand, analysts at Westpac mentioned:
After a strong comeback in March, the market expects the manufacturing PMI (prior: 50.6, market f/c: 50.5) and non-manufacturing PMI (prior: 53.6, market f/c: 53.6) to hold their ground in June.
How could they affect AUD/USD?
Considering the quarter-end consolidation, coupled with the recent risk-on momentum backed by the upbeat US data, positive readings from China can help the aussie pair to extend the latest recoveries. On the contrary, the coronavirus (COVID-19) woes will get additional strength to defy the latest upswing if the figures slip below 50.00 mark suggesting a contraction in the activities.
Technically, a three-week-old triangle formation between 0.6850 and 0.6925 restricts the pair’s immediate moves above the 200-day SMA level of 0.6665. As a result, traders eyeing a major move should be careful unless these levels are broken.
Key Notes
AUD/USD eyes 0.6900 with focus on China PMIs, RBA's Debelle
AUD/USD Forecast: Under mild-pressure on dollar’s demand
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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