The Australian dollar declined today, falling for the twelfth consecutive session against its US counterpart. There were plenty of reasons for the decline: unfavorable domestic macroeconomic data, poor economic reports in China, escalation of US-China trade tensions.
The Australian Industry Group Australian Performance of Services Index dropped from 52.2 in June to 49.3 in July. That was the biggest drop in a year. Furthermore, being below the neutral 50.0 level, the indicator suggested that the sector returned to contraction after two months of positive results.
The Caixin China Services PMI fell from 52.0 in June to 51.6 in July. It was at the lowest level in five months. Analysts were not expecting any change to the index. China is Australia’s largest trading partner, therefore news from the Asian country tends to affect the Australian currency strongly.
Talking about China, the yuan dropped against the US dollar below the psychologically important level of 7. Markets considered depreciation a sign that China may embark on a currency war as trade tensions between the world’s two biggest economies escalate.
AUD/USD declined from 0.6791 to 0.6762 as of 10:29 GMT today. EUR/AUD jumped from 1.6335 to 1.6495. AUD/JPY dropped from 72.39 to 71.72.
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