The Australian dollar dropped more than 1 percent today, reaching the lowest level in more than 6 years against its US counterpart. The reason for the slump was the depressing manufacturing data from China.
According to the Markit/Caixin survey, the flash China’s manufacturing PMI unexpectedly dropped from 49.4 to 48.2 in July — the weakest reading in more than a year. The news was very negative to Aussie, suggesting lower demand for raw materials shipped from Australia.
Yesterday, Standard & Poor’s affirmed Australia’s credit ratingat AAA/A-1+ with a stable outlook, but warned:
We could lower the ratings if Australia’s budgetary performance does not improve broadly as we currently expect.
AUD/USD sank from 0.7351 to 0.7276 as of 13:39 GMT today, touching the low of 0.7259 intraday — the weakest rate since May 2009. AUD/JPY tumbled from 91.10 to 90.11.
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