FX News – Jan 23 2014: Poor Chinese PMI Drags Down AUD, NZD

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The AUD/USD pair fell once again after China revealed a drop in its PMI in January. It came out at 49.6 this month versus 50.5 in December, and against analysts' expectations of a rise to 50.6. This is the lowest PMI the country has seen in six months.
Possible factors that caused a drop in the PMI are the slowdown in China's manufacturing sector, which then had an impact on the employment situation.

The news from China led to another sharp drop in the AUD/USD pair. This happened after the pair made a quick rise yesterday after the release of the positive Australian CPI. The pair peaked at the 0.8880 area yesterday, but has considerably lost steam after that. It is currently trading at 0.8803, with initial resistance at 0.89222, followed by 0.8944. Meanwhile, initial support is at 0.8818, followed by 0.8796.

The aussie wasn't the only currency affected by the news from its biggest trading partner. The kiwi also felt the effect of the Chinese PMI as the NZD/USD pair took a nose dive, sending it to under the 0.8300 area. It is currently trying to make a comeback and is trading at 0.8289, with initial resistance seen at 0.8329, followed by 0.8350. Meanwhile, initial support is at 0.8277, followed by 0.8256.

Yesterday, the United Kingdom released its employment data wherein its unemployment rate fell to just 7.1%. This put it even closer to the MPC's target threshold of 7.0% before it decides to increase interest rates again.

The news led to a rise in the GBP/USD in yesterday's trading. This sent the pair to its highest level this month after spending much of the time under the 1.6500 area. It is currently trading at 1.6568, with initial resistance seen at 1.6652, followed by 1.6694. Meanwhile, initial support is at 1.6514, followed by 1.6473.

By FX Strategy Team, Published on 23rd of January 2014
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