HSBC PMI Manufacturing came in at 52.3 for January, better than 52.0 expected and 51.5 previous. On the other hand, Chinese official figures reflected a slower growth, coming in at 50.4 vs 51.0 expected, and 50.6 previous. This is a rare occurrence, with HSBC research generally showing lower figures compared to the official counterpart. The previous time this happen was in Oct 2011. Does this have any significance though? Official Chinese figures have always been perceived “optimistic”, just short of “fudging” by the officials. Having a private poll showing growth certainly instil more confidence, but caution is advised against looking too deep into this divergence, as PMI is derived via sampling with different individuals, and there is always a statistical chance that samples contains outliers which are hard to filter out.
Bottomline: Manufacturing sector is slightly bullish as both HSBC and Chinese numbers are above 50.0.
Is the market happy with the “slightly bullish” verdict? Looking at how AUD/USD performed, it is apparent that it is not. Expectations were for a 51.1 print for the official figures, and price fell around 30 pips following the news was release, reaching a low of 1.04 without really testing the round number support. Even before the news, Australia published its own PPI, which was also less than expected, pulling price lower from the 1.0445 high. HSBC figures was less regarded, only pushing price higher to 1.041 rather than eliminating losses from the Chinese data.
Technical wise, price is still within the 1.039 – 1.044 uncertainty range. The push up to 1.045 has failed to break the bearish momentum from Jan 30th high to Jan 31st low. A break below 1.039 will help to reaffirm bearish momentum, while a break above 1.044 (preferably 1.045) will signal that bearish momentum has possibly stalled, with a push above Jan 30th high allow for fresh bullish momentum to take hold.
3 Black Crows bearish reversal potentially forming on the weekly chart. Preferably the body of current weekly candle should be longer not just for a better “look”, but also as a showing of the degree of bearish momentum. 1.03 could still act as strong support, and the most bearish scenario would be having current week candle closing below the significant support. Likelihood of such strong movement on the final day of the week is low, but do keep a watch on US NFP tonight as a strong showing will help to strengthen USD to push AUD/USD lower.
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