The Aussie fell against the greenback after the Reserve Bank of Australia left interest rates unchanged at its meeting earlier today and on China’s disappointing PMI data. AUD/USD dropped 0.9% to trade below 0.67 while USD/JPY rises for a third consecutive day to trade mid 142-143.EUR/USD trades below 1.10 and GBP/USD continues to decline but consolidates above 1.28. The Bloomberg Dollar Spot Index wins for the second day.
China’s Caixin manufacturing PMI slipped to a 6-month low of 49.2 in July, worse than estimated by economists and registering the first contraction since April. In addition to this disappointing data, China’s home sales tumbled 33% YoY in July, underscoring why policy makers are seeking to tackle this fallback in the housing market, which is weighing on the recovery of the country’s economy.
UK House prices have fallen the most since 2009 as borrowing costs rise. The Nationwide Building Society stated that its measure of prices fell 0.2% in July, from the previous 0.1% gain in May. Annually, the rate of decline accelerated to 3.8%, the highest since 2009. This data about prices flags the 13 interest rates hikes done by the Bank of England since the end of 2021, that constrained the ability of consumers to be able to pay more for properties.
Later today we will have US Manufacturing PMI data, which should show a slight rebound from June’s decline. Nevertheless, it should remain in a contractionary territory (<50) for a ninth consecutive month as producers expect a slowdown in consumer demand and avoid keeping excess production.