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AUD/USD slips after China PMI data points to weaker demand
China’s NBS manufacturing PMI fell to 49.2 in July, while the non-manufacturing PMI eased to 49.0, reinforcing concerns about sluggish conditions in Australia’s biggest trading partner.
The Australian dollar edged lower against the US dollar, with AUD/USD trading around 0.7020 during Asian hours after more than 1% gains in the prior session, according to FXStreet.
The move was linked to disappointing China Purchasing Managers’ Index releases, with China’s NBS manufacturing PMI falling into contraction territory at 49.2 in July, down from 50.3, and below market estimates of 50.0. The non-manufacturing PMI also dipped to 49.0 versus expectations of 50.0, signaling further weakness in the broader economy.
FXStreet cited commentary from Deutsche Bank that the data also pointed to easing price pressures, noting annual inflation moderated from 4.0% to 3.8% year over year. That slowing in headline inflation, the analysis said, can temper expectations for additional near-term tightening by the Reserve Bank of Australia and keep the Aussie under pressure.
Despite the softer China signals, FXStreet reported the US dollar held firm as risk sentiment improved on diplomatic developments, including progress in negotiations between the US and Iran toward restoring stability in the Strait of Hormuz. The outlet also referenced the Federal Reserve leaving interest rates unchanged for a fifth straight meeting, while pointing to an active internal debate within the FOMC.