Australian Dollar Falls as China PMI Boosts RBA Rate Cut Bets
- AUD/USD continued its daily fall as China’s Caixin Manufacturing PMI missed forecast
- 48.2 in December as opposed to the 48.9 expectation and the 48.6 reading in November
- China’s PMI data may have added to dovish RBA policy expectations
The Australian Dollar continued its daily fall against the Greenback as adverse economic data from China crossed the wires. Caixin Manufacturing PMI showed a print of 48.2 in December versus the 48.9 expectation and the 48.6 reading in November. This marks the tenth consecutive contraction for the second largest global economy’s industrial sector.
Australian front-end bond yields were also falling during the trading session which may have been initially caused by risk aversion. The soft PMI print likely amplified this drop. Since yields continued to decrease after the data was released, the news may have spurred dovish RBA policy speculation. China is Australia’s largest trading partner which means slowing growth in the former may hurt the latter’s economy.