Chinese, Australian Economic Woes Drag Australian Dollar Lower

The Australian dollar went through additional losses against the US dollar on Wednesday, reaching 0.6580. Worsening concerns over China’s economic health and commodity prices were the primary contributors to the AUD’s slide.

Australia reported weak Judo PMIs during the Asian session, which could potentially restrict any further weakening of the AUD. The Reserve Bank of Australia (RBA) remains firm on delaying rate cuts due to persistently high inflation, which may potentially extend further AUD gains.

China’s Q2 GDP fell short of expectations due to weak demand both domestically and overseas. Worries regarding sluggish GDP growth in the world’s second-largest economy deepened following the People’s Bank of China (PBoC)’s unexpected rate-cut decision on Monday and a lack of significant spending measures in the Third Plenum.


Preliminary Judo Bank PMI readings indicated that the Composite PMI dipped to 50.2 from the previous release of 50.7, the Manufacturing PMI showed a slight improvement of 47.4, it fell back into contraction, and the Service PMI expanded more slowly at 50.8.


The AUD/USD moving below the 20 and 100-day Simple Moving Average (SMA) indicates an area of concern and suggests that the downward movements might not be just a correction. However, as long as the pair retains a position above the 200-day SMA, the downward adjustments could still be considered ‘corrective’.