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AUD/USD holds near 0.7030 as China data drags and RBA bets fade
Australia's July PMI data pointed to renewed contraction in China, while US GDP growth of 1.5% in Q2 helped keep the USD under pressure.
FXStreet reports AUD/USD traded around 0.7030 on Friday, largely unchanged from the prior session after a strong rally in the pair.
The Australian dollar found support from persistent weakness in the US dollar, but upside momentum was capped by softer Chinese economic indicators. Friday data showed China’s NBS Manufacturing PMI fell to 49.2 in July from 50.3, while the Non-Manufacturing PMI declined to 49, both below market expectations.
At the same time, the US dollar remained under pressure after US GDP grew 1.5% in the second quarter, down from 2.1% in Q1 and below consensus estimates of 2.1%. That weaker growth reading continued to weigh on the Greenback.
FXStreet also pointed to shifts in Australia’s policy outlook. After second-quarter inflation data, markets have largely ruled out an RBA rate hike at the August 11 meeting, limiting further gains in the Aussie despite the softer USD backdrop. Deutsche Bank said the Q2 CPI print was below expectations, with headline prices rising 0.6% quarter over quarter versus 0.7% expected, and annual inflation easing to 3.8% from 4.0%.