The Australian dollar weakened against the other major currencies in the Asian session on Monday after data showed that the manufacturing sector in China moved further into contraction territory in April.
Data from the HSBC Bank showed that the manufacturing sector in China moved further into contraction territory in April, with a PMI score of 48.9. This missed forecasts for 49.4 and was down from last month’s preliminary reading that suggested a score of 49.2.
Traders await the Reserve Bank of Australia’s rate decision on Tuesday. Economists expect the bank to cut rates by 25 basis points to a new record low of 2.00 percent.
Global factors, such as weakness of the U.S. economy and the continuing quantitative easing programs of Europe and Japan, weighed on the currency.
Meanwhile, falling commodity prices also put pressure on the currency.
In other economic news, the Australian Bureau of Statistics showed that the total number of building permits issued in Australia was up a seasonally adjusted 2.8 percent on month in March, standing at 19,419. That topped forecasts for a decline of 1.5 percent following the 3.2 percent contraction in February.
On a yearly basis, building permits surged 23.6 percent – also topping expectations for an increase of 16.7 percent following the 14.3 percent spike in the previous month.
Consumer prices in Australia are expected to have decelerated in April, the latest survey from TD Securities and the Melbourne Institute showed. Inflation is forecast to have slowed to 0.3 percent on month after it was called at 0.4 percent in March. On a yearly basis, consumer prices are tipped to slow to 1.4 percent from 1.5 percent in the previous month.
Friday, the Australian dollar fell 0.82 percent against the U.S. dollar, 0.13 percent against the yen and 0.86 percent against the euro.
In the Asian trading today, the Australian dollar fell to a 1-week low of 0.7801 against the U.S. dollar, a 6-day low of 93.72 against the yen and a 4-day low of 0.9499 against the Canadian dollar, from last week’s closing quotes of 0.7839, 94.21 and 0.9533, respectively.
If the aussie extends its downtrend, it is likely to find support around 0.76 against the greenback, 91.30 against the yen and 0.93 against the loonie.
Against the euro, the aussie dropped to 1.4345 from Friday’s closing value of 1.4259. On the downside, 1.46 is seen as the next support level for the aussie.
Pulling away from an early 4-day high of 1.0413 against the NZ dollar, the aussie edged down to 1.0377. At Friday’s close, the aussie was trading at 1.0393 against the kiwi. The aussie may test support near the 1.02 region.
Looking ahead, manufacturing PMI reports for April from major European economies and Eurozone Sentix investor confidence index for May are due to be released in the European session.
In the New York session, U.S. factory orders for March is slated for release.
At 12:25 pm ET, U.S. Federal Reserve Bank of Chicago President Charles Evans is expected to speak about current economic conditions and monetary policy at the Columbus Economic Development Board’s Annual Meeting in Indiana.
Subsequently, U.S. Federal Reserve Bank of San Francisco President John Williams is expected to speak on “Creating Jobs and Economic Opportunity through Small Business” before the Pacific Community Ventures Luncheon in San Francisco at 3:10 pm ET.
U.K. banks will be closed in observance of the Early May Bank holiday. The banks of Japan will be also closed in observance of Greenery Day holidays.
The material has been provided by InstaForex Company – www.instaforex.com