China’s manufacturing PMI contracted to 49.2 in July, below forecasts, weighing on the Australian Dollar amid weaker demand.
AUD/USD retreated to 0.7020 in Asian trading Friday after China’s National Bureau of Statistics reported a July manufacturing PMI of 49.2, down from 50.3 and below the 50.0 consensus. The non-manufacturing PMI also fell to 49.0, signaling contraction in Australia’s largest export market.
The data underscores persistent weakness in China’s economy, with both sectors slipping below the 50 threshold that separates expansion from contraction. Analysts had anticipated stable readings, making the miss a fresh drag on risk-sensitive currencies like the Aussie.
Separately, Australian inflation cooled further, with annual CPI easing to 3.8% from 4.0%, reducing pressure on the Reserve Bank of Australia to hike rates. The USD remained firm despite easing Middle East tensions, limiting AUD downside.