AUD/USD: Bulls keep the baton above 0.6700, 16-week high, after China Caixin Manufacturing PMI
- AUD/USD carries Friday’s pullback from 0.6618 to remain strong above 0.6700.
- China’s Caixin Manufacturing PMI offered a positive surprise to bear the below 50 marks.
- Markets seem to cheer US President Trump’s no sanctions on China, ignores worrisome headlines from the SCMP and Fox news.
Tuesday’s RBA becomes the key, for now, US-China news and the US PMIs can offer intermediate clues.
AUD/USD remains positive around 0.6730, the highest since February 12 after China’s Caixin Manufacturing PMI flashed upbeat figures during Monday’s Asian session.
China’s Caixin Manufacturing PMI for May beats 49.6 market consensus and 49.4 prior with 50.7 figures.
On Sunday, China’s NBS Manufacturing PMI for May slipped below 51.00 forecasts and 50.8 prior to 50.6 whereas Non-Manufacturing PMI rose from 53.2 to 53.6 for the same month.
Despite downbeat data from the biggest customer, the Aussie pair seems to cheer US President Donald Trump’s refrain from announcing any sanctions on the Asian major, as feared, due to its rush towards gripping more powers in Hong Kong.
In doing so, markets seem to ignore the threats to the US-China relations, as cited by the South China Morning Post (SCMP), while also shrugging off harsh statements from US Secretary of State Mike Pompeo.
Against this backdrop, the US 10-year Treasury yields rise two basis points to 0.664% while Japan’s Nikkei and Australia’s ASX 200 are up 1.05% and 0.61% respectively by the press time.
Traders may now gear up for Tuesday’s RBA monetary policy statement. While the Aussie central bank showed readiness to combat the coronavirus (COVID-19) led pessimism, Governor Philip Lowe recently praised the economic conditions. As a result, the RBA will be closely followed amid the mixed clues for near-term direction.
Read: RBA Preview: Not enough to kick-start anything in AUD/USD at make-or-break levels
It should also be noted that the US Manufacturing PMIs from the Markit and the ISM will also be followed, together with the US-China headlines, for immediate impact.
Technical analysis
Bulls will wait for a daily closing beyond the March month high of 0.6686 before looking at the 161.8% of March-May upside, near 0.6800. Failing to do so highlights an 11-day-old support line, currently around 0.6590/95, on the bears’ radars.
Also read: Chart of the day: AUD/USD is at make-or-break resistance, 0.6400 or 0.6820
Reprinted from FXStreet,the copyright all reserved by the original author.
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