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Chinese Manufacturing Expands 1st time in 2014: AUD/USD in Bullish Continuation

HSBC's Flash Manufacturing PMI for China for June came in at 50.8 .This beat forecast of 49.7. May's reading was revised slightly lower to 49.4 from its original reading of 49.7.

(source: forexfactory.com)

This is the first time this year that this index shows growth in manufacturing in China.

Here is a breakdown provided from the official release:


Official Release: HSBC Flash Manufacturing PMI

Positive data from China usually helps the Aussie, because Australia's economy is linked to China's demand for its resources. A China that is growing will also boost the Australian economy. Let's take a look at the AUD/USD.

The 1H chart shows a very strong bullish reaction to the HSBC Flash PMI data. The market looks poised to test the 0.9437/0.9440 area, which is the June high. 

(AUD/USD 1H chart, 6/23)

In the daily chart, you can see that the 2014 high awaits at 0.9460. A break above 0.9465 should open up a Nov. 2013 resistance pivot at 0.9543. The facts that the moving averages are now in bullish alignment, and the RSI held above 40 in 2014 after tagging 70, support the bullish continuation scenario.