AUD/USD slips 30 pips on below-forecast China PMI

• The Aussie dollar is losing ground, courtesy of a weaker-than-expected China NBS Manufacturing PMI for April.
• 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 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 GDP number of 6.4 percent that the economy may be bottoming out. As a result, AUD/USD dropped 30 pips to a session low of 0.7037 immediately after the release of the PMI and is currently trading in the red at 0.7040.

The Aussie dollar could 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