THE TAKEAWAY: Chinese Manufacturing PMI Rose to 53.3 in April > Fears of Global Growth Slowdown Renewed, Leading Traders to Adjust Portfolios > AUDUSD Fell
Data published by the China Federation of Logistics and Purchasing shows that the country’s manufacturing purchasing managers’ index increased to 53.3 in April from 53.1 in March. This change surprised traders who expected a slightly larger figure of 53.6 and initiated an AUDUSD selloff following the figure’s release.
A growing Chinese economy is a boon to local nations that rely on the country for trade, but today’s data release did not convince traders that the nation’s economy is poised to reverse its deceleration of growth. As fears of a global slowdown of economic growth were rekindled, traders sold currencies native to exporting countries reliant on Chinese consumption, like the Aussie.
The Australian dollar follows poor Chinese PMI since a faltering Aussie export sector would suggest that the likelihood of a central bank rate cut is more likely.
In the moments after the release, the AUDUSD fell from 1.0420 to 1.0412.
Overall, price action on the Aussie was minimal as traders focus on the RBA rate decisiondue out later this morning. Currently, analysts overwhelmingly expect an interest rate cut from 4.25 percent to 4.00 percent.
