The Australian Dollar is Facing China PMI Data as Iron Ore Prices Fall

THE AUSTRALIAN DOLLAR, THE AUD/USD, IRON ORE, CHINA, AND THE PMI ARE ALL TALKING POINTS.

The Australian dollar declines against a stronger dollar, and iron ore prices decrease.

Chinese manufacturing PMI data will be used to assess the Chinese economy.

The AUD/USD is approaching a trendline that might serve as a support level for a comeback.

THE ASIA-PACIFIC OUTLOOK FOR THURSDAY

After markets finished neutral in New York, the Australian Dollar gave way to a generally firmer US Dollar overnight. Earlier this week, Federal Reserve Chair Jerome Powell said, “We don't know if we will be moving back to something that looks like, or is relatively comparable,” to the prior scenario at a conference for central bankers in Portugal. “I don't believe we're going back,” ECB President Christine Lagarde stated with greater self-assurance.

The overall message provided by central bankers showed that they are ready to forgo economic growth

to reduce inflation. During one night, market-based inflation indices such as breakeven rates plummeted. For the first time since February 11, the US two-year breakeven rate (a measure of two-year inflation) fell to 3.45 percent. As a result, gold's price fell for the third session in a row, as measured by the XAU.

However, even though iron ore prices in China have fallen by almost 5% the previous day, the Australian dollar has only responded little to the dip. The action is rather unexpected given China's recent relaxation of restrictions. One source of worry is that imports will likely lag early this year's levels, as officials tend to prefer a gradual and steady approach to deliver assistance.

However, Chinese economic data may give a respite for prices. It will be released by China's National Bureau of Statistics (NBS) at 01:30 GMT (PMI). Analysts anticipate that the number will cross the wires at 50.5, bringing the index out of contraction and into growth. If the print is better than predicted, iron ore and the Australian dollar may rise.

Overnight, AUD/USD fell for a third straight day, pushing prices close to the October 2021 swing high's trend line. This trendline may serve as a foundation for a future resurgence. If this is the case, the dropping 20-day SMA might act as a potential barrier. A cross over the MACD oscillator's signal line seems imminent.

DAILY AUD/USD CHART

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