Market Commentary and Intraday News
Australian Dollar Slides As China's Official PMI Disappoints
298 days ago
(RTTNews) - The Australian dollar edged lower against its major rivals on Wednesday morning in Asia as China's disappointing manufacturing PMI figures prompted traders to trim positions in risk-associated assets.
A slowdown in Chinese economic growth would hurt the Australian economy as China is the largest export partner of mining goods and raw materials rich Australia.
China's factory purchasing managers' index slowed to 50.1 in July from 50.2 in June, results of a survey released by the National Bureau of Statistics showed today. A PMI reading above 50 indicates expansion in manufacturing activity, while anything below that indicates contraction.
Meanwhile, the Markit/HSBC purchasing managers' index deteriorated again in July to reach at 49.3, below 49.5 recorded in the flash survey results and at a steeper pace than estimated earlier. This was, however, better than June's reading of 48.2.
Besides, Australia's manufacturing activity dropped sharply in July largely due to declines in manufacturing production and employment, data from Australian Industry Group-PricewaterhouseCoopers showed today.
The Performance of Manufacturing Index dipped 6.9 points to 40.3. A reading below 50 indicate a contraction in activity.
"Manufacturers are responding by reassessing and re-modelling their businesses but, as suggested by another drop in new orders and with the full impact of the carbon tax still to be felt, further falls in overall activity are likely in the months ahead," said Ai Group chief executive Innes Willox.
Upcoming central bank decisions from the U.S. and Europe added further pressure on high-yielding currencies. The U.S. FOMC will conclude its meeting today and the European Central Bank will announce its rate decision on Thursday.
The aussie slipped to a 5-day low of 81.58 against the yen following the disappointing economic data as the latter spiked higher on increasing safe-haven flows into it. The pair then erased some of its losses shortly and is currently trading at 81.84. The next downside target for the aussie-yen pair is seen around the 81.30 level and a likely resistance is seen at 82.30.
The Australian currency also fell to 2-day lows of 1.0466 against the US dollar, 1.1741 against the euro, 1.2935 against the NZ dollar and 1.0508 against the Canadian dollar following the data. On the downside, the aussie may find support levels at 1.2920 against the kiwi, 1.1770 against the euro, 1.0450 against the greenback and 1.05 against the Canadian dollar.
Looking ahead, Japan's vehicle sales for July is slated for release at 1:00 am ET.
Manufacturing purchasing manger indexes from the major eurozone economy are expected to garner market attention in the European session.
The U.S. ADP employment change, ISM manufacturing and construction spending data-all for July are scheduled to release in the New York morning. The FOMC rate decision is the major event to watch in the NY afternoon session.
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