The Chinese Service Purchase Manager Index (PMI) fell from 51.9 in March to 50.7 in April, Caixin's recent data on Tuesday.
The data remained by the market forecast during the period of 51.7 by a wide margin.
AUD/USD reaction to Chinese services PMI
Chinese proxy, Australian dollar (AUD) is a deep red with data outlet, with AUD/USD Losing 0.30% daily at a rate of 0.6450 during writing.
Australian Dollar Fuck
One of the most important factors in the Australian Dollar (AUD) is the level of interest rates set by the Australian Reserve Bank (RBA). As Australia is a resource -rich country, the second key manager is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as Australian inflation, its growth rate and trade balance. Market minds-investors accept more risky assets (risk-on) or are looking for safe Haven (risk-field) -s factor, which is a positive risk for AUD.
The Australian Reserve Bank (RBA) affects the Australian dollars (AUD), setting Australian banks to borrow to each other. This affects the level of interest rates for the entire economy. The main purpose of the RBA is to maintain a stable inflation rate of 2-3%by adjusting the interest rates up or down. Relatively high interest rates compared to other major central banks support AUD and the opposite relatively low. Quantitative alleviation and effort with the former AUD negative and another can also be used to influence the credit conditions.
China is the largest trading partner in Australia, so the health of the Chinese economy is a significant impact of the Australian dollar value (AUD). If the Chinese economy is doing well, it buys more raw materials, goods and services in Australia, raising the demand for AUD and pushing its value. The opposite is that the Chinese economy does not grow as fast as it was thought. Therefore, positive or negative surprises of Chinese growth data are often a direct impact on the Australian dollar and its couples.
Raudmaa ore is the largest export of Australia, which, according to the 2021 data, is $ 118 billion a year, which is the main destination of China. Therefore, the price of iron ore may be the Australian dollar leader. In general, AUD also rises the price of iron ore as the demand for all currency is increasing. The opposite is the case when the price of iron ore falls. Higher prices for iron ore also cause Australian positive trade balance, which is also positive for AUD.
A trade balance, which is a difference between what the state earns from its exports compared to what it pays for imports is another factor that can affect the value of the Australian dollar. If Australia produces highly coveted exports, it becomes a purely surplus demand from foreign buyers who want to buy their exports compared to what it spends to buy imports. Therefore, the positive net trade balance is strengthened by the AUD if the trade balance is negative.
