Australian dollar slips on weak China data

A survey of Chinese manufacturing missed analysts’ forecasts on Tuesday, with China’s official management index (PM) dipping to 50.1 in April. Forecasts for the PMI were wagered on a steady outcome of 50.5.

A measure of services also missed expectations with a pullback of 54.3. Both official and Caixin data have disappointed after strong March numbers

Australian dollar price

The Australian dollar slipped to $0.7040 after the PMI release, falling slightly from $0.7064. The Australind dollar is often affected by China’s PMI data, as Australia is a major exporter of resources to China.

Against a basket of currencies, the dollar was flat at 97.859, while the euro was little moved at $0.1180.

Investors are cautiously awaiting figures for economic growth in the common currency bloc due later on Tuesday.

Federal Reserve

Investors remain cautious of the Federal Reserve’s two-day policy meeting, ending on Wednesday. Analysts say the movement of the dollar will face major hurdles while investors await policy decisions.

While no change in policy is expected, the market awaits Jerome Powell’s comments on US economic growth and slowing inflation.

US data overnight showed consumer spending enjoyed the sharpest rebound in 9-1/2 years in March, while core inflation still slowed to a 14-month low.

Core personal consumption expenditures index, slowed to 1.6% and further way from the central bank's 2% target range.

IG market analyst, Kyle Rodda says bond yields are ticking higher across the curve. ‘Without much of a fundamental macro-economic catalyst, traders sell safe-haven assets to join the equity market rally.’

US 10 Year Treasury yields climbed around 3 basis points overnight, and the US 2 Year note’s yield edged 1 point higher.

Mr. Rodda says despite still looking very bent out of shape, the slight steepening of the yield curve speaks of a market increasingly comfortable in the long-term growth outlook for the US economy.