- A weaker-than-expected China NBS Manufacturing PMI is hurting the Aussie dollar – a proxy for China.
- China’s manufacturing sector barely expanded in April.
- Weak China PMIs may trigger risk aversion, leading to a deeper drop in AUD/USD.
The Aussie dollar is feeling the pull of gravity, courtesy of a weaker-than-expected China factory activity data published by the National Bureau of Statistics at 01:00 GMT.
China’s NBS Manufacturing PMI (Apr), which focuses mainly on state-owned enterprises with relatively easy access to credit compared to private entities, printed at 50.1, missing the expected unchanged reading of 50.5.
Meanwhile, the Non-Manufacturing PMI (Apr) slipped to 54.3 from 54.8 seen in March, missing the estimated print of 54.5.
A below-forecast NBS Manufacturing PMI contradicts the view put forward by the steady first quarter annualised GDP figure of 6.4 percent that the economy may be bottoming out. As a result, AUD/USD is currently trading in the red at 0.7040, having dropped 30 pips to a session low of 0.7037 immediatelt after the release of the dismal data.
The Aussie dollar may extend losses during the day ahead if the global equities respond negatively to the fact that the manufacturing activity barely managed to expand in April.
An above-50 PMI indicates expansion while a below-50 print indicates contraction.
Technical Levels
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