AUD Slides as China's Manufacturing Sector Contracts

The Australian Dollar (AUD) saw a slight decline to around 0.7020 on Friday, as markets reacted to disappointing Chinese economic data. The release of China's National Bureau of Statistics (NBS) Manufacturing Purchasing Managers' Index (PMI) showed that the sector contracted in July, with a reading of 49.2 compared to 50.3 in June and below market estimates of 50.0.

Analysts at Deutsche Bank noted that Australia's largest trading partner is showing ongoing weakness, which is contributing to a softer tone in the AUD. The latest data also showed a further easing in price pressures, with annual inflation moderating from 4.0% to 3.8% year-over-year (yoy).

Meanwhile, the US Dollar (USD) remains firm despite an easing of global risk aversion brought on by positive diplomatic developments. The US Federal Reserve left interest rates unchanged for a fifth consecutive meeting, with a 9-3 vote revealing a lively debate within the Federal Open Market Committee (FOMC).