When are China’s official PMI data and how could they affect AUD/USD?

China Federation of Logistic and Purchasing will release July month’s official PMI numbers around 01:00 GMT on Friday. It should also be noted that Australia’s second quarter (Q2) Producer Price Index (PPI), at 01:30 GMT, becomes an additional catalyst to watch for the AUD/USD pair traders.

Aussie traders will be particularly interested in watching how the largest customer’s key activity numbers defend recoveries that have been questioned off-late. Additionally, any more negatives in the domestic data could increase worries of the AUD/USD bulls near a multi-week high.

Market consensus signals the headline NBS Manufacturing PMI to soften from the previous 50.9 to 50.7 while the Non-Manufacturing PMI may recede from 54.4 to 51.2. Talking about the Aussie PPI, QoQ figures suggest recovery from 0.2% to 0.3% but YoY data indicates no change in 1.3% level.

Ahead of the data, TD Securities said:

We expect a slightly moderation in the official July manufacturing PMI to 50.7 from 50.9 in June. The pace of improvement in activity has levelled off while infrastructure investment has slowed slightly. Policymakers have stepped back in terms of policy stimulus, both in terms of credit growth and monetary loosening. High frequency data are reflecting this, with state refineries operating rates growing at a slower rate and steel inventories halting their decline, a sign of slower demand. We expect moderation in output and new orders, while exports and imports components are likely to remain in contraction.

On the other hand, analysts at Westpac mentioned:

China’s official July PMIs are due at 11: 00 am Sydney /9: 00 am local. Manufacturing and non-manufacturing PMIs have been robust of late. After a sharp rebound in both surveys, the consensus is for consolidation in July, 50.8 on manufacturing and 54.5 on services.

How could they affect AUD/USD?

With the AUD/USD pair currently trading near the highest levels in 15.5-months, around 0.7205 by the press time of early-Asian session trading on Friday, bulls may have to get cautious if the data disappoints. An additional reason for the quote traders to remain a sceptic of the latest rise is the coronavirus (COVID-19) resurgence, downbeat Aussie inflation data as well as chatters of negative rates. On the contrary, any upbeat signals of the heading PMIs will be enough for the bulls to attack the year 2019 top around 0.7300.

Technically, the pair’s ability to defy the latest lower-high formation will have to cross April 2019 peak surrounding 0.7207 to 0.7300. In doing so, 0.7240/50 may offer an intermediate halt. On the downside, a clear break below 0.7065/60 area, including June 10 high and July 24 low, will be the key to watch for the bears.

Key Notes

AUD/USD: Bulls keep flirting with 0.7200 ahead of China PMI

AUD/USD Forecast: Retreats from 0.7200 area but keeps focus on the upside

About the China NBS Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI) released by the China Federation of Logistics and Purchasing (CFLP) studies business conditions in the Chinese manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction. As the Chinese economy has an influence on the global economy, this economic indicator would have an impact on the Forex market.

About the China Non-Manufacturing PMI

The official non-manufacturing PMI, released by the China Federation of Logistics and Purchasing (CFLP), is based on a survey of about 1,200 companies covering 27 industries including construction, transport and telecommunications. It's the level of a diffusion index based on surveyed purchasing managers in the services industry and if it's above 50.0 indicates industry expansion, below indicates contraction.