Chinese PMI Impress To Start A Full Week OF Data

Chinese PMI Impress To Start A Full Week OF Data

We’ve had some much better than expected Chinese HSBC manufacturing PMI at the open of the week which not only is likely to add to risk-on sentiment, but has already given the Australian dollar a strong boost just as it looked like turning to the downside. Sellers were capping the tops and there were reports of good offers but there is no escaping the bullish chart. With such a full week of data we could be in for a choppy week now.

I terms of data we have the following focus points this week:
**Mon Jun 23**
8:00am EUR French Flash Manufacturing PMI
8:00am EUR French Flash Services PMI
8:30am EUR German Flash Manufacturing PMI
8:30am EUR German Flash Services PMI
9:00am EUR Flash Manufacturing PMI
9:00am EUR Flash Services PMI
9:30am GBP BOE Credit Conditions Survey
2:45pm USD Flash Manufacturing PMI

3:00pm USD Existing Home Sales
**Tue Jun 24**
9:00am EUR German Ifo Business Climate
9:30am GBP Inflation Report Hearings
3:00pm USD CB Consumer Confidence
3:00pm USD New Home Sales
**Wed Jun 25**
4:00am AUD RBA Deputy Gov Lowe Speaks
7:00am EUR GfK German Consumer Climate
1:30pm USD Durable Goods Orders m/m
1:30pm USD Final GDP q/q
**Thu Jun 26**
10:30am GBP BOE Gov Carney Speaks & Financial Stability Report

1:30pm USD Unemployment Claims
1:30pm USD Core PCE Price Index m/m
**Fri Jun 27**
12:30am JPY Tokyo Core CPI y/y
12:50am JPY Retail Sales y/y
All Day EUR German Prelim CPI m/m
8:00am EUR Spanish Flash CPI y/y
9:30am GBP Final GDP q/q
2:55pm USD Revised UoM Consumer Sentiment
All times GMT+1
**If you have any questions or comments then feel free to tweet me @LFXMark**

**USD% Index**
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The dollar’s drop back down to and eventually through support has failed to gain downward momentum as suspected, mostly due to EURUSD’s failure to break a new high. There is clearly a flow of money out of Europe currently to perhaps correct the overly bullish flow of money into Europe for the second half of last year but this impressive result from China may scare some Euro bears out of Euro shorts and into Aussie Longs which will ultimately see the dollar sold, but how far we will get is a complex balancing act now. We could see a push lower into strong dollar bids for that final leg higher or traders could take the move above 50 for the PMI as a strong sell for the dollar. We’ll have to see how London handle things. I bullish USD in the short term

USD% Index Resistance (EURUSD support): EURUSD 1.3585, 1.3564, 1.3554,
USD% Index Support (EURUSD support): EURUSD 1.3619, 1.3628, 1.3653
**EUR% Index**
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The range of the ECB candle has still not been breached and until we do so in either direction then we will likely pinball inside the range in a meaningless way. Depending on how things on Monday morning London session go in terms of risk sentiment as a result of the Chinese PMI, I favour a break lower before a rally to break the highs so long as we see encouraging signs when the key bullish trend line in EURUSD is met which nicely coincides with the Yearly pivot. I am bearish EUR short term, bullish medium term EUR
EUR% Index Resistance: EURUSD 1.3635, 1.3700
EUR% Index Support: EURUSD 1.3577, 1.3553
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**JPY% Index**
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Direction-less is a fairly good way to describe the Yen currently, with the key USDJPY pair stuck firmly within a range for some time now. Fundamentally and technically I prefer upside for the JPY% index, although with such strong momentum having been generated lower for the Yen for such a long period of time as a result of the massive stimulus program from the BOJ, few are willing to stick their neck on the block and buy Yen in large quantities until there is a stronger signal to unwind short positions. There is the possibility of a war situation creating risk aversion, but as usual with these things, the real moves in currencies won’t happen until the drones start bombing insurgents in Iraq. We also had some very impressive Japanese PMI numbers so we have seen some strength creep in there too. I am slightly bullish JPY% until we reach the edges of the range
JPY% Index Resistance (USDJPY Support): USDJPY 101.50, 101.23
JPY% Index Support (USDJPY Resistance): USDJPY 102.84, 103.67
**GBP% Index**
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The pound held up well considering the disappointment from the MPC in terms of expectations after Carney’s comments however with the pair popping multi-year highs and not really getting much of a reaction there was clearly a desire to unwind some longs and take profit from positions. There were reports of Sovereign names on the offer for cable around the highs and they seem to have capped the rally. I remain bullish GBP in the long term, neutral/bearish in the short term.
GBP% Index Resistance: GBPUSD 1.7043, 1.7084
GBP% Index Support: GBPUSD 1.6983, 1.6916
**AUD% Index**
[!fm[](/uploads/story/11623/pic6.png)](# “”)

Looking last week like it might crack lower the Chinese numbers seem to have changed that outcome so it’s all up in the air right now and rather choppy. We still seem rather overpriced considering how pessimistic the RBA and rating agencies are regarding the structural problems with the Australian economy, but once again a great Chinese number has saved the day. China does have a large surplus now of raw materials such as Iron Ore though so even with an up-tick in demand, this may not directly translate into gains for Australia. I am bullish AUD
**AUD% Index Resistance: AUDUSD 0.9439, 0.9500**
**AUD% Index Support: AUDUSD 0.9400, 0.9350**
**CHF% Index**
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We’ve been threatening to break the range for the CHF% index for some time now and it looks like we may finally do it. From this stating point we have very little room to manoeuvre without a break lower, so we would need a sharp sell-off in EURCHF to keep the CHF% index afloat should we see an acceleration lower for the index. This is entirely possible as a risk aversion move due to war in the middle east snapping up safe haven demand so we should be vigilant in that regard.
I am neutral CHF
**CHF% Index Resistance (USDCHF support): USDCHF 0.8915, 0.8800**
**CHF% Index Support (USDCHF resistance): USDCHF 0.9023, 0.9050**
Note – the large spike on Mon 16th is a GBPCHF pricing error at the broker
**LittlefishFX Relative Currency Index Strength**
All of the currency indexes used for this analysis are available as a NinjaTrader indicator from the link below. They are eight indexes, USD, EUR, JPY, GBP, AUD, CHF, CAD and NZD with each index made up of the remaining seven pairs, weighted in accordance with the distribution of global FX volume as measured by the Bank of International Settlements in their Triennial Survey.
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By John Adam
John Adam was one of the Invezz Founding Partners & Lead Editor's up until 2017. John has an unmatched breadth and depth of experience in all things investing, and we wish him the best in his pastures new.

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