AUD/USD and NZD/USD Fundamental Analysis: China PMIs in Focus

Highlights

• The AUD/USD and the NZD/USD are in action by proxy today, with NBS private sector PMI numbers set to move the dial this morning.
• Sentiment toward recent PBoC moves to boost economic activity could deteriorate should the PMIs be weaker than expected.
• However, the US Core PCE Price Index and personal spending numbers will be the key drivers.

It is a busier start to the day for the AUD/USD and the NZD/USD. NBS private sector PMI numbers from China will be in focus this morning. A more marked contraction across the manufacturing sector and a slowdown in service sector activity could force the PBoC to deliver more to support the economy.

Economists forecast the manufacturing PMI to increase from 48.8 to 49.0 and the services PMI to fall from 54.5 to 53.7.

Other stats include private sector credit numbers from Australia. However, we expect these to play second fiddle to the PMIs.

Looking at the US session, it is a big day for the global financial markets. The US Core PCE Price Index and personal spending will likely decide the outcome of the FOMC meeting in July and influence sentiment toward the September interest rate decision.

US economic indicators from Thursday had a hawkish on Fed bets despite the influence of today’s stats.

According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 89.3% versus 81.8% on Wednesday. Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 26.8%, up from 16.4% on Wednesday.

AUD/USD Price Action

This morning, the AUD/USD was up 0.03% to $0.66178. A mixed start to the day saw the AUD/USD fall to an early low of $0.66115 before rising to a high of $0.66193.

Technical Indicators

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The AUD/USD sat below the 50-day EMA, currently at $0.66876. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA closing in on the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6639) would give the bulls a run at R2 ($0.6662) and the 50-day EMA ($0.66876). However, failure to move through the 50-day EMA ($0.66876) would leave S1 ($0.6572) in view. An AUD/USD move through the 50-day EMA (0.66876) would send a bullish signal.

Resistance & Support Levels

NZD/USD Price Action

This morning, the NZD/USD was down 0.03% to $0.60674. A mixed start to the day saw the NZD/USD fall to an early low of $0.60611 before rising to a high of $0.60699.

Technical Indicators

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The NZD/USD sat below the 50-day EMA, currently at $0.61340. The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6098) would give the bulls a run R2 ($0.6126) and the 50-day EMA ($0.61340). However, failure to move through 50-day EMA ($0.61340) would leave S1 ($0.6046) in view. A move through the 50-day EMA would signal a breakout session.

Resistance & Support Levels