Currency Analysis Report 1-1-19…Aussie Sinks On China PMI Data

Currency Analysis Report 1-1-19…Aussie Sinks On China PMI Data
January 02 15:02 2019

China’s factory activity contracted for the first time in 19 months in December as domestic and export orders continued to weaken.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for December, released on Wednesday, fell to 49.7 from 50.2 in November, marking the first contraction since mid-2017.

Source

NOTE: A reading above 50 indicates expansion, while a reading below that signals contraction

China’s worse-than-expected PMI reading on the last day of 2018 suggests a challenging start to 2019, said Frederic Neumann, co-head of Asian Economics Research at HSBC.

“China is a good gauge in terms of temperature about what’s going on in the global industrial cycle,” Neumann told CNBC’s “Squawk Box.”

The “PMI numbers out today suggest the economy is still decelerating. That’s going to weigh down not just Chinese GDP growth but really global trade,” Neumann said.

In fact, Nomura economists warned that “the worst is yet to come,” for China.

“Looking ahead, we see more headwinds to growth from weakening domestic demand, the ongoing credit downcycle, a cooling property sector and lingering China-U.S. trade tensions,” the economists wrote.

Source

China is Australia’s largest trading partner in terms of both imports and exports and as a result, Australia is more affected by China’s economy than most countries. As China goes, the Australia currency, the Aussie goes. Thus, it should be no surprise that the Aussie sank on the news. Lets go to the charts to see how low the Aussie may go.

Monthly Chart (Curve Time Frame) – monthly supply is 0.8800 and monthly demand is 0.6900.

Weekly Chart (Trend Time Frame) – the trend is , but just broke out of the descending channel, so price action/bias is to the upside.

Daily Chart (Entry Time Frame) – at this time there is no trade set-up. What I’m looking for next is for price to break the monthly demand zone than pull back or for price to bounce off the monthly demand zone and start trending up on the on the 60 min time frame, than 4 hr time frame.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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rollandthomas
rollandthomas

I'm a retail investor like most of you and learning everyday, but I have been educated and trained to identified the Smart Money on the charts to pick up whatever crumbs they leave behind.

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