AUD Retreats on Weak China PMI, Cooler Inflation

The AUD/USD currency pair retreated on Friday's Asian session, losing momentum after posting gains of over 1% in the previous day. This decline is attributed to weaker-than-expected Chinese Purchasing Managers' Index (PMI) readings, which point to a slowdown in Australia's key export market.

China's official NBS Manufacturing PMI fell to 49.2 in July, below the 50 threshold that marks expansion and contraction, and short of market expectations of 50.0. The Non-Manufacturing PMI also weakened, printing at 49.0 versus forecasts for 50.0.

The deterioration in both manufacturing and services gauges highlights persistent challenges in China, amplifying headwinds for the Australian Dollar given its deep trade ties with China.