Australian Dollar Falls as China PMI Disappoints
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The HSBC PMI Index is a composite indicator which aims to provide an overall view of activity in the manufacturing sector and acts as a leading indicator for the economy. Ahead of the announcement, economists were expecting a value of 51.5 only slightly less than the previous months print of 51.6. The Australian Dollar has been under pressure recently, as comments from the RBA have indicated that there is still scope for easing even if previous rate cuts are still permeating the economy.
The so called ‘Aussie’ was weaker ahead of the announcement as traders turned their attention to the relatively soft data that China released last week as a potential gauge for the PMI. China is Australia’s largest two-way trading partner and when the PMI release disappointed, the Australian Dollar fell sharply as investors speculated that the Dollar would head lower as the mining boom slows, and China growth concerns resurfaced. After a high of around 1.0306 early in the week, the Aussie trended lower to 1.0250, then dropped sharply to 1.0226 on the release.