The Australian dollar declined against its most-traded rivals today after flash data showed that economic activity slowed significantly last month. While both the manufacturing and the services sectors continued to expand, the pace of expansion was slower than in the preceding month.
The Commonwealth Bank Flash Manufacturing Purchasing Manager’s Index fell to 50.1 in October from 50.3 in September. The Commonwealth Bank Flash Services Business Activity Index demonstrated a much steeper decline, falling to 50.8 this month from 52.4 in the previous month. CBA Chief Economist Michael Blythe commented on the result:
The trade war and other uncertainties mean businesses are deferring capex and consumers are putting off spending. The resulting drop in production has pulled global manufacturing PMIs lower, taking services PMIs along for the ride. Australian manufacturing and service firms are not immune to these global trends. The ongoing weakness in the flash PMI readings for October should be judged against this global backdrop. Australia is faring a little better than the global trend. PMI readings remain in expansion territory, albeit just. Employment is still growing and longer-run expectations are still positive.
With no more macroeconomic releases scheduled in Australia this week, the Aussie will likely look for events outside of Australia to guide its movement. Next week will be more eventful in terms of macro reports, with inflation data scheduled for Wednesday being arguably the most important of them.
AUD/USD declined from 0.6851 to 0.6830 as of 9:51 GMT today. EUR/AUD rallied from 1.6235 to 1.6294. AUD/JPY slipped from 74.46 to 74.25.
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