AUD/USD – Australian dollar could face pressure after soft Chinese manufacturing PMI

AUD/USD is steady on Tuesday, as the pair continues to trade quietly this week. Currently, the pair is at 0.7048, down 0.11% on the day. On the release front, there are no major Australian events. Later in the day, Australia releases AIG manufacturing index. There was disappointing news out of China, as manufacturing PMI dipped to 50.1 in April, shy of the estimate of 50.7 points. This reading is barely above the 50.0 level, which separates expansion from contraction. In the U.S., the Employment Cost Index remained steady at 0.7%, matching the estimate. Chicago PMI dropped sharply to 52.6, down from 58.7 points in the previous release. This missed the forecast of 59.1 points. CB Consumer Confidence improved to 129.2, above the estimate of 126.2 points. On Wednesday, the U.S. releases ADP nonfarm payrolls and the Federal Reserve issues a rate statement.

The Australian dollar fell 1.5% last week, as a mix of soft Australian data and sharp U.S. numbers sent the currency reeling. The Aussie could face further headwinds, as the Chinese manufacturing PMI release pointed to stagnation. The Chinese slowdown has damaged the Australian economy, as the Asian giant is Australia’s number one trading partner. Weak Australian inflation in Q1 has raised concerns that the dovish RBA could cut rates in order to stimulate the economy, perhaps as early as this summer. This will likely put further pressure on the Aussie, which tested the symbolic 70 level last week.

The Federal Reserve has said it expects to hold interest rate levels for the rest of the year, and the most recent inflation numbers will reinforce that stance. The Core PCE Price Index, which is the Federal Reserve’s preferred gauge for inflation, remains below the Fed’s target of 2.0%. The indicator came in at 0.0% in March and 0.1% in February (the two events were released on Tuesday due to the government shutdown earlier this year). On an annualized basis, the indicator gained 1.6%, just shy of the estimate of 1.7%. There was better news from consumer spending, which jumped 0.9% in March, compared to the estimate of 0.7%. The strong reading was a result of increased spending on motor vehicles and health care.

Is the U.S dollar losing love?

AUD/USD Fundamentals

Monday (April 29)

• 21:00 Chinese Manufacturing PMI. Estimate 50.7. Actual 50.1

Tuesday (April 30)

• 8:30 US Employment Cost Index. Estimate 0.7%. 0.7%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 3.7%. Actual 3.0%
• 9:45 US Chicago PMI. Estimate 59.1. Actual 52.6
  
• 10:00 US CB Consumer Confidence. Estimate 126.2. Actual 129.2
• 10:00 US Pending Home Sales. Estimate 1.1%. Actual 3.8%
• 18:30 Australian AIG Manufacturing Index

Wednesday (May 1)

• 8:15 US ADP Nonfarm Employment Change. Estimate 181K
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.50%
• 14:00 FOMC Press Conference

*All release times are EDT

* Key events are in bold

AUD/USD for Tuesday, April 30, 2019

Open: 0.7056 High: 0.7069 Low: 0.7031 Close: 0.7048

AUD/USD Technical

AUD/USD showed some volatility in the Asian session. The pair posted slight gains in European trade but then retracted. AUD/USD is steady in North American trade.

• 0.6970 is providing support
• 0.7085 is the next resistance line
• Current range: 0.6970 to 0.7085

Further levels in both directions:

• Below: 0.6970, 0.6825 and 0.6744
• Above: 0.7085, 0.7190, 0.7240, and 0.7315

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