Range Markets

The Australian dollar declined in early trading as the market reacted to the latest manufacturing and non-manufacturing PMI data from China. In a report, China Logistics said that the overall manufacturing PMI dropped from 52.1 in November to 51.9 in December. That was a bigger decline than the median estimate of 52.0. The non-manufacturing PMI also declined from 56.4 to 55.7 while the composite number fell from 55.7 to 55.1. These numbers show that business activity in China is still robust. They came a day after the bureau of statistics slashed the country’s growth estimate from 6.1% to 6.0%.

The US dollar declined slightly in the American and Asian sessions as traders focused on weak economic numbers from the US. Numbers released yesterday showed that pending home sales declined by 2.6% in November, a sharper decline than the previous 0.9%. This decline was worse than the expected increase of 0.2%. Just last week, data from the country showed that existing and new home sales declined in November mostly because of the lockdowns announced by several states. Today, the currency will react to the final initial jobless claims numbers of the year.

The price of crude oil held near its March highs after the final inventories data of the year. Data by the Energy Information Administration (EIA) showed that inventories declined by more than 6 million barrels last week. That was a bigger decline than the overall estimate of a 2.5 million decline. It was also bigger than the previous week’s decline of more than 562,000. Earlier on, data by the American Petroleum Institute (API) showed that the number of inventories fell by more than 2 million barrels.


The XBR/USD pair is trading at 51.38, which is a few points below this month’s high of 52.46. On the four-hour chart, the Bollinger Bands have continued to squeeze, which is a signal of a potential breakout. Similarly, the accumulation and distribution indicator has started to drop, which is a sign that some bulls have started to sell. Therefore, in the near term, the price will possibly remain at the current range before an eventual bullish or bearish breakout.


The AUD/USD pair declined slightly today after the Chinese manufacturing PMI numbers. On the four-hour chart, the pair remains above the 25-day and 15-day moving averages. It is hovering near a multi-year high. Similarly, the Relative Strength Index (RSI) has moved above the overbought level. Therefore, the pair may end the year in the current range.


The EUR/USD pair dropped from yesterday’s high of 1.2310 to the current level of 1.2288. On the four-hour chart, the price is a few pips above the important support at 1.2272. It remains above the 25-day and 15-day exponential moving averages while the Relative Strength Index (RSI) has started to decline. Like the AUD/USD, this pair could finish the week at the current range.

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