Aussie dollar slips back on China PMI’s
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Daily Currency Update
The Australian dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.6485 at the time of writing. The AUD/USD pair corrected sharply in Tuesday’s European session from the five-month high of 0.6500 posted on Monday. The Aussie pair retraces as the Australian dollar underperforms across the board due to a slowdown in business activity in China. China is sliding deeper into economic weakness that is being worsened by its response to external shocks. Tariffs are drying up international demand for Chinese goods, and in a bid to keep factories alive, Beijing is urging exporters to turn inward. However, that pivot is compounding the very problem it aims to solve. Caixin Manufacturing and Services Purchasing Managers’ Index (PMI) data for April have demonstrated that businesses are facing pressure due to the fallout of higher tariffs by United States (US) President Donald Trump. Activities in both the manufacturing and the services sector expanded at a moderate pace. The exports from China to the US are facing a 145% import duty, limiting US companies from buying from their Chinese trading partners. China is not alone in facing economic challenges, but its size and centrality in global supply chains make its domestic policy choices a global concern.Key Movers
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of currencies, remained under heavy selling pressure on Tuesday as investors turned defensive ahead of the Federal Reserve’s (Fed) monetary policy decision. The Federal Reserve is virtually certain to maintain interest rates at 4.25-4.5% on Wednesday. The meeting will be interesting as Fed Chair Powell is expected to push back against pressure from President Trump to lower rates. The Fed is likely to remain on the sidelines until the uncertainty over US tariffs becomes clearer. Trump's zigzags over tariffs have triggered wild swings in the financial markets, but Trump has said some trade agreements will be announced soon. Fed Chair Jerome Powell’s press conference following Wednesday’s meeting could define the next policy move, with markets watching for dovish cues. The Dow Jones Industrial Average dropped 283 points, or 0.7%, while the S&P 500 and Nasdaq Composite declined 0.8% and 0.9%, respectively. Losses were led by heavyweight tech stocks including Nvidia, Meta Platforms, and Tesla, each falling over 1%. Financials also weighed, with Goldman Sachs shares slipping.Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▲
- AUD/EUR: 0.5600 - 0.5800 ▲
- GBP/AUD: 2.0400 - 2.0600 ▼
- AUD/NZD: 1.0700 - 1.0900 ▲
- AUD/CAD: 0.8850 - 0.9050 ▼