Australian dollar falls after China sees manufacturing industry shrink
THE Australian dollar tumbled today after a private survey showed China’s manufacturing activity unexpectedly shrank in May, casting a cloud over the global economic outlook.
Express.co.uk
Thu, Jun 1, 2017
The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) fell to 49.6, indicating a contraction for the first time in 11 months and coming in below market expectations.
The Caixin report, which tends to focus on smaller firms, contrasted sharply with official readings on Wednesday that had shown steady manufacturing growth in China.
The Australian dollar slid 0.5 percent to $0.7396. The Aussie slipped to $0.7384 at one point, its lowest level since May 12.
“There have been signs of increased unsteadiness in China’s economic conditions, starting from May onwards,” said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
Whether this unsteadiness would shake investor confidence in the global growth outlook in the second quarter would become a focus for market participants, Murata said, noting that emerging Asian currencies could come under pressure if confidence wavers.
China’s yuan remained firm even after the weak factory activity reading.
The onshore Chinese yuan touched its highest level against the dollar in nearly seven months after China’s central bank set the yuan midpoint at the strongest level since November.
The yuan added to the gains made on Wednesday, when it rallied on views that China’s central bank is now less inclined to allow the currency to weaken markedly against the U.S. dollar.
The onshore yuan rose to as high as 6.7878 per U.S. dollar, its highest level since November.
The offshore yuan rose to 6.7245 per dollar at one point, its strongest level since October.
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