Aussie Pressured by Chinese Data
The Australian dollar weakened during Asian trading on Friday (July 31) after Chinese economic activity data yielded disappointing results. The AUD/USD pair edged lower, hovering around 0.7020, after having previously gained more than 1%.
Pressure mounted after China's NBS manufacturing index fell to 49.2 in July. This figure was lower than the previous reading of 50.3 and fell short of market expectations of 50.0.
A reading below 50 indicates that China's manufacturing sector has returned to contraction. This situation is a concern for Australia, as China is its largest trading partner and a major buyer of Australian commodities.
China's non-manufacturing sector also weakened to 49.0, coming in below the expected 50.0. The data reinforced concerns that China's economic recovery remains fragile and that demand for commodities could slow down.
The Australian dollar was also weighed down by domestic inflation figures for the second quarter that came in lower than expected. These conditions reduced the likelihood of a Reserve Bank of Australia interest rate hike in August, while the US dollar continued to find support from market buying activity.
Source: Newsmaker.id
