Aussie Weak Despite Market Sentiment, Economic Data to Blame

The Australian dollar declined against most major currencies today despite the positive market sentiment, which should have been supportive to the currency. The possible reason for the decline was domestic macroeconomic data, which was somewhat mixed, with some bad releases.
The Australian Industry Group Australian Performance of Manufacturing Index dropped to 49.4 in June from 52.7 in May. Being below the 50.0 level of no change, the index signaled about the first contraction of manufacturing since August 2016.
The Reserve Bank of Australia reported that the commodity price index rose 13.0% in June from a year ago. That was a faster pace of growth than the negatively revised 11.5% registered in May.
The Melbourne Institute Inflation Gauge was unchanged in June from the previous month, the same as in May.
The manufacturing data from China, Australia’s biggest trading partner, was not good too. That can explain why the Aussie was unable to profit from the positive risk sentiment caused by the US-China trade truce.
AUD/USD dropped from 0.7020 to 0.6990 as of 13:27 GMT today. EUR/AUD gained from 1.6185 to 1.6219, bouncing from the session low of 1.6144. AUD/JPY was at 75.20, near the opening level of 75.77, retreating from the day’s maximum of 76.27.

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