Commodity prices tumbled in Asia yesterday, as investors remain concerned about China’s economy. There were rumours doing the rounds that China is conceding defeat and will officially lower its growth target. Additionally, there were suggestions the country will not be looking to add stimulus, which discouraged some of the risk takers to buy the dips in commodities and their related stocks and currencies.
The HSBC reading, due out at 11.45am AEST, is expected to come in at 50 – a slight pullback from the previous 50.2 reading. The real risk here is whether the reading is in contractionary territory. This would spook markets even further.
AUD/USD printed a low of $0.8853, the lowest level since February, and we could be headed to $0.8800 if the data disappoints. My preferred strategy is to sell near-term rallies into the $0.893 region.