Australian Dollar remains stronger following China’s RatingDog Manufacturing PMI data
AUD/USD depreciates after opening at a bullish gap, remaining in the positive territory and trading around 0.7030 during the Asian hours on Monday.
The Australian Dollar (AUD) continued to trade stronger on Monday, holding gains in the positive territory and reaching around 0.7030 during the Asian hours. This was largely due to economic developments in China, Australia's largest trading partner. China's RatingDog Manufacturing Purchasing Managers' Index (PMI) for July fell slightly to 50.9 from 51.7 in June, missing market expectations of 51.5, but still indicating expansion in manufacturing activity.
Additionally, while the US Dollar (USD) faced pressure following Japan's joint currency interventions with the United States, the Australian Dollar was supported by inflation data from Australia, which was softer than expected. The Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter stated that the latest CPI print was "a touch softer" than anticipated, mainly driven by lower fuel prices.
This moderation in price pressures was not expected to signal a broader disinflation trend, as the inflation rate remained above the RBA's 2-3% target band. The impact of China's economic health on the Australian Dollar is significant, as a strong Chinese economy increases demand for raw materials, goods, and services from Australia, which in turn lifts the demand for the AUD and pushes up its value.
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