Weak trading prospects landed the Aussie near the bottom of the forex heap last week. Can this week’s catalysts push it back up?
Quarterly private capital expenditure (Feb 28, 12:30 am GMT)
Headline numbers for Australia’s private capital expenditure (CAPEX) report missed expectations and printed weaker quarterly and annualized readings. The details weren’t so bad, however, as decline in mining-related expenditures was mostly offset by a jump in plant, equipment, and machinery spending.
The headline readings failed to inspire volatility among the Aussie pairs, but the details soon made it easy for the bulls to extend the comdoll’s intraweek uptrend.
China’s official PMI reports (Feb 28, 1:00 am GMT)
This week we’ll see China’s official manufacturing and service PMI reports, which are expected at 49.5 (unchanged) and 54.5 (from 54.7) for the month of February.
If there’s anything that last week’s Aussie price action taught us, it’s that the bulls and bears still very much care about what happens to China’s demand of Australian exports.
Keep close tabs on the manufacturing sector, which is more likely to affect demand for Australia’s export products.
AIG manufacturing index (Feb 28, 9:30 pm GMT)
The Australian Industry Group’s manufacturing PMI shot up by 2.5 points to 52.5 in January, as exports saw mild improvement while six out of seven indices showed expansion.
The upside surprise, coupled with a better-than-expected manufacturing PMI from China, helped the Aussie end the day higher across the board.
Can the manufacturing industry sustain its slow-but-steady pace in February? Note that only lower-tier reports from Japan and New Zealand are scheduled for release during the trading session. If we see significant hits or misses, then the Aussie’s initial reaction to it could extend until the next trading sessions.
Market risk sentiment
Australian and Chinese-related headlines might have dominated the Aussie’s price action last week, but that doesn’t mean that it won’t be moved by global risk sentiment this week!
The biggest stories that might rock the Aussie will likely come from updates on the U.S.-China trade negotiations.
Talks continue between top officials like U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. Meanwhile, Trump has hinted that there’s a “good chance” that a deal would be made, though markets already think that it’s likely that the POTUS would extend the trade war truce beyond March 1.
Missed last week’s price action? Read AUD’s price recap for February 18 – 22!