The Australian Dollar downside was given a reprieve today as China PMI data came in above expectations. Forecast to have contracted to 49.7 the data set shows mild expansion, coming in at 50.1
Whilst this data is not exactly going to set the world alight, the positive China data has arrived at a time when traders are looking for any and every reason to short the Aussie leading up to next week’s RBA Cash Rate decision. With the market consensus for a rate cut next week and Iron Ore continues to print fresh, record, lows then any uptick on the Aussie is likely to attract further bearish attention.
The Aussie has depreciated over 4% since 24th March and looks set to challenge the 0.756 lows over the coming sessions. Today’s data saw bulish traders buck the trend to drive the Aussie up to 0.7665 resistance but we have several technical levels of resistance around here I expect to hold.
With traders looking for any and every reason to short the Aussie lately then these bursts of good data should allow bears to enter at higher (and more favourable) prices, to profit from further declines as we approach the Cash rate decision from RBA next week.
Nonfarm payrolll data on Friday will have the final say for the Aussie although traders should be aware that as it is Easter Friday and global FX markets will be closed, liquidity will be very thin which can result in choppy and volatile conditions.