AUD/USD and NZD/USD Appetite Tested by China PMIs

It was a busy start to the Asian session for the AUD/USD and NZD/USD pairs. In the early hours of this morning, New Zealand business consent figures were disappointing.

In August, building consents fell by 1.6%, partially reversing a 4.9% jump in July. However, the Kiwi showed little reaction ahead of private sector PMI numbers from China.

Economic indicators from Australia also failed to move the dial, despite a pickup in private sector credit. In August, private sector credit increased by 0.8%, following a 0.7% rise in July.

Private sector PMI numbers from China weighed on the Aussie and the Kiwi.

In September, the NBS Manufacturing PMI rose from 49.4 to 50.1 versus a forecasted increase to 49.6. The return to growth was bullish for both pairs. However, the NBS Non-Manufacturing PMI fell from 52.6 to 50.6, with the all-important Caixin Manufacturing PMI declining from 49.5 to 48.1.

According to the Caixin Manufacturing Survey,

• Total new business fell for a second consecutive month, leading to a decline in output.
• Weaker demand forced firms to cut purchasing activity and inventories.
• Input prices fell at the fastest pace since early 2016, with falling demand putting downward pressure on inputs.
• Selling prices fell at the most marked pace since December 2015 as firms looked to pass on cost savings to customers to bolster sales.

Following today’s stats, the market focus will likely return to the Fed. US economic indicators include personal spending and inflation numbers, which will dictate direction late in the day.

AUD/USD Price Action

At the time of writing, the Aussie was down 0.14% to $0.64906. A choppy start to the day saw Aussie rise to a high of $0.65182 before falling to a low of $0.64892.

Technical Indicators

The AUD/USD needs to avoid the $0.6487 pivot to target the First Major Resistance Level (R1) at $0.6538. The Aussie would need a marked shift in risk sentiment to support a breakout from the Thursday high of $0.65248.

In the case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6576 and resistance at $0.66. The Third Major Resistance Level (R3) sits at $0.6666.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6448 into play. However, barring a market flight to safety, the AUD/USD pair would likely avoid sub-$0.6400 and the Second Major Support Level (S2) at $0.6397.

The Third Major Support Level (S3) sits at $0.6307.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The AUD/USD sits below the 50-day EMA, currently at $0.65452. The 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

An AUD/USD move through R1 ($0.6538) and the 50-day EMA ($0.65653) would support a run at R2 ($0.6576) and $0.66. The 200-day EMA sits at $0.67263. However, failure to move through the 50-day EMA would leave the AUD/USD under pressure.

NZD/USD Price Action

This morning, the Kiwi was down 0.25% to $0.57118. The Kiwi rose to a high of $0.57506 before falling to a low of $0.57118.

Technical Indicators

The NZD/USD needs to avoid the $0.5702 pivot to target the First Major Resistance Level (R1) at $0.5757. The Kiwi would also need a marked shift in risk sentiment to support a breakout from the Thursday high of $0.57333.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.5788 and resistance at $0.58. The Third Major Resistance Level (R3) sits at $0.5873.

A fall through the pivot would bring the First Major Support Level (S1) at $0.5672 into play. However, barring a market flight to safety, the NZD/USD pair would likely avoid sub-$0.5600. The Second Major Support Level (S2) at $0.5617 should limit the downside.

The Third Major Support Level (S3) sits at $0.5532.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bearish signal. The NZD/USD sits below the 50-day EMA, currently at $0.57626. The 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA sliding back from the 200-day EMA, delivering bearish signals.

An NZD/USD move through R1 ($0.5757) and the 50-day EMA ($0.57626) would support a run at R2 ($0.5788) to target the 100-day EMA ($0.58629). The 200-day EMA sits at $0.59847. However, failure to move through the 50-day EMA would leave the NZD/USD under pressure.