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China PMI drops below forecasts, nudging AUD/USD lower
China’s manufacturing PMI fell to 49.2 and the non-manufacturing PMI eased to 49.0, pushing AUD/USD down to about 0.7026.
China’s official data showed a softening in business activity, with the manufacturing Purchasing Managers’ Index (PMI) falling to 49.2 in July from 50.3 previously. The reading also came in below the market consensus of 50.0, according to the China National Bureau of Statistics (NBS), which published the figures.
The NBS also reported that the non-manufacturing PMI eased to 49.0 in July, down from 50.2 in June. Market expectations were for a 50.0 print, per FXStreet’s summary of the data.
FXStreet said the downbeat PMI results were followed by a slight move lower in the Australian dollar, with AUD/USD falling 0.04% to trade around 0.7026 at the time of writing. The outlet linked AUD sensitivity to broader macro drivers, including Australian interest rates set by the Reserve Bank of Australia (RBA) and demand tied to China’s economic health.
FXStreet further noted that China is Australia’s largest trading partner and that Australia’s export mix can matter for AUD, including iron ore, which it described as a major export influenced by Chinese demand. It also highlighted that risk sentiment can affect FX markets, with risk-on conditions generally supportive for higher-yielding currencies like AUD.