AUD/USD and NZD/USD Fundamental Analysis: China PMIs in Focus

It is a busy Friday for the AUD/USD. Housing credit and private sector credit for February will be in focus this morning. With the RBA considering a pause on interest rate hikes next month, weak private sector credit numbers would further allow the RBA to pause on the monetary policy front.

Economists forecast private sector credit to rise by 0.4% following a 0.4% increase in January.

While the Australian stats will influence the Aussie, private sector PMI numbers from China will provide direction to the AUD/USD and the NZD/USD pairs.

NBS Manufacturing and Non-Manufacturing PMI numbers for March will draw plenty of interest. On Monday, industrial profits tumbled in February, suggesting manufacturing sector woes. Weak numbers would weigh on commodities and commodity currencies though investors need to consider sub-components of the PMI.

Economists forecast the Manufacturing PMI to fall from 52.6 to 51.5 and the Non-Manufacturing PMI to decline from 56.3 to 54.3.

Later today, US economic indicators will also provide direction, with core PCE price Index and personal spending/income figures due out. The markets expect banking sector woes to force the Fed to stand pat on monetary policy moves next month. A pickup in inflationary pressure could test the theory.

Investors should also monitor central bank chatter throughout the day.

AUD/USD Price Action

The Aussie was down 0.03% to $0.67035. A mixed start to the day saw the AUD/USD rise to an early high of $0.67098 before falling into the red.

Technical Indicators

The AUD/USD needs to avoid the $0.6697 pivot to target the First Major Resistance Level (R1) at $0.6733. A move through the Thursday high of $0.67183 would signal a bullish session. However, the Aussie Dollar would need the China PMI numbers to support a pre-US session breakout day.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6754. The Third Major Resistance Level (R3) sits at $0.6811.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6676 into play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.6650 and the Second Major Support Level (S2) at $0.6640.

The Third Major Support Level (S3) sits at $0.6583.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The AUD/USD sits above the 100-day EMA, currently at $0.66906. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 100-day EMA ($0.66906) would support a breakout from the 200-day EMA ($0.67314) and R1 ($0.6733) to target R2 ($0.6754). However, a fall through the 100-day EMA ($0.66906) would bring the 50-day EMA ($0.66829) and S1 ($0.6676) into play. A fall through the 50-day EMA would send a bearish signal.

NZD/USD Price Action

This morning, the Kiwi was down 0.02% to $0.62619. A bearish start to the day saw the NZD/USD fall to an early low of $0.62527 before finding support.

Technical Indicators

The NZD/USD needs to avoid the $0.6244 pivot to target the First Major Resistance Level (R1) at $0.6285. A move through the Thursday high of $0.62664 would signal a bullish session. However, the China PMIs need to beat forecasts to support a breakout.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6307. The Third Major Resistance Level (R3) sits at $0.6371.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6222 into play. However, barring a risk-off-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.62 and the Second Major Support Level (S2) at $0.6181.

The Third Major Support Level (S3) sits at $0.6118

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The NZD/USD sits above the 200-day EMA, currently at $0.62350. The 50-day closed in on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.

A hold above the 200-day EMA ($0.62350) would support a breakout from R1 ($0.6285) to target R2 ($0.6307). However, a fall through the 50-day EMA ($0.62271) would bring S1 ($0.6222) and the 100-day EMA ($0.62211) into play. A fall through the 50-day EMA would send a bearish signal.