- AUD/CAD is extending grind below 200-DMA at 1.0025, bias lower.
- Antipodeans knocked down to fresh daily troughs following the release of worse-than-expected Chinese manufacturing PMI on Thursday.
- China's Caixin manufacturing PMI for May arrived at 49.6 vs 50.1 expected and 50.3 last, slipping into contraction on slower increases in output and new orders.
- Focus now on Australian GDP figures for the March quarter due next week.
- Analysts at the National Bank of Australia (NAB) expect a modest contraction in real Q1 GDP of -0.1% q/q. This would be the second contraction in three quarters.
- Yesterday’s capex survey provided minimal hope for a rebound in non-mining capex next year.
- AUD/CAD has broken strong trendline support at 0.9985, scope for test of 0.9860 (trendline).
- Technical indicators on weekly charts are also heavily bearish. We see bearish invalidation only on close above 200-DMA.
Support levels - 0.9925 (Apr 12 low), 0.9912 (61.8% Fib of 0.96439 to 1.03458 rally), 0.9860 (trendline)
Resistance levels - 1.0009 (5-DMA), 1.0065 (20-DMA), 1.0077 (38.2% Fib)
Recommendation: Good to go short on rallies around 1.0020/35, SL: 1.0080, TP: 0.9925/ 0.99/ 0.9860
FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at -126.692 (Bearish), while Hourly CAD Spot Index was at -83.7766 (Bearish) at 0640 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
