The AUD/USD: China’s Economy Under Scrutiny For the Australian dollar, China’s private sector PMI numbers could impact the AUD/USD pair. Economists f
The AUD/USD: China’s Economy Under Scrutiny
For the Australian dollar, China’s private sector PMI numbers could impact the AUD/USD pair.
Economists forecast the NBS Manufacturing PMI to remain at 50.1 in January while projecting a drop in the Non-Manufacturing PMI. Lower-than-expected PMI readings could signal a weakening demand environment, potentially affecting Aussie trade terms.
With a trade-to-GDP ratio of over 50% and one-third of exports bound for China, the Aussie economy and RBA policy outlook remain sensitive to China’s economic health. A pullback in private sector activity would support a more dovish RBA policy outlook, potentially dragging the AUD/USD pair toward $0.62.
Conversely, a pickup in private sector activity could bolster the Aussie economy, signaling a less dovish RBA stance. Under this scenario, the AUD/USD pair could break above the 50-day EMA, targeting the $0.63623 resistance level.
In December, RBA Governor Michele Bullock highlighted the influence of China’s economy on monetary policy, stating:
“US moves against China could affect Aussie trade terms with China, potentially impacting the Aussie economy.”
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