We also have a couple of extra key releases left from China having already seen the disappointments (a bearish looking open for Aussie) in the NBS Manufacturing PMI and Non-Manufacturing PMI’s for April over the weekend, with 50.1 actual vs consensus 50.3 and 53.5 vs 53.8 prior and respectively. We will see the Caixin Manufacturing PMI tomorrow right ahead pf the RBA interest rate decision and Caixian China Services PMI later in the week along with retails sales and the trade balance for Australia.
In respect of the price of the Aussie, despite broad based weakness in the greenback of late, the bears have got back in control of AUD/USD and have been so since Australia’s CPI result for Q1. This data was a game-changer for AUD having fuelled RBA easing expectations.
“With labour costs subdued and the global inflation backdrop still relatively benign, the RBA recently admitted that domestic CPI inflation is set to “remain low over the next year or two”. The negative surprise to 1Q16 CPI (actual 1.3% YoY vs 1.7% cons) has fuelled market expectations for an RBA rate cut,” confirmed analysts at ING Bank, adding, “A survey by Bloomberg shows 15 analysts are looking for the cash rate to be left at 2%, while 12 expect a 25bp cut.”
AUD/USD levels
However, a steady RBA this week could see the bulls reemerge and the Aussie trade higher for a test of $0.7670 level and 28th April highs as a key target while a break below $0.7500 would otherwise confirm the major reversal and bears in control. Technically, the price trades in bearish territory below the 20 dma at 0.7659 and the 4hr 200 sma at 0.7635.
