AUD/USD remains subdued for the third successive session, trading around 0.6550 during the Asian hours on Friday. The pair moves little following the release of China’s NBS Purchasing Managers’ Index (PMI) data. It is important to note that any shift in China’s economic conditions could also affect the Australian dollar (AUD), given the close trade ties between China and Australia.
China’s NBS Manufacturing Purchasing Managers’ Index dropped sharply to 49.0 in October, following 49.8 recorded in September. The reading came in above the expected 49.6 figure in the reported month. Meanwhile, the NBS Non-Manufacturing PMI unexpectedly rose slightly to 50.1 against the previous and the market consensus of 50.0 readings.
The AUD/USD pair faced challenges as the Australian Dollar (AUD) struggled amid market sentiment that remained subdued following the meeting between Presidents Donald Trump and Xi Jinping, which offered few positive surprises. President Trump announced that tariffs on China would be reduced to 47% from the current 57% and confirmed that the rare earth dispute had been resolved, removing restrictions on China’s rare earth exports. However, Trump acknowledged that not all matters were addressed during the talks.
The Federal Reserve lowered its benchmark rate by 25 basis points to a range of 3.75%–4% in a 10–2 vote. The decision was not unanimous, as Fed Governor Stephen Miran supported a larger 50-basis-point cut, while Kansas City Fed President Jeffrey Schmid voted to keep rates unchanged.
Fed Chair Jerome Powell stated that the available data indicate little change in the outlook for employment and inflation since the September meeting. Powell added that another rate cut in December is far from certain, emphasizing that the path forward remains uncertain, which provided support for the US Dollar (USD).
Economic Indicator
NBS Manufacturing PMI
The NBS Manufacturing Purchasing Managers Index (PMI), released by the China Federation of Logistics & Purchasing (CFLP) and China’s National Bureau of Statistics (NBS), is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at manufacturing companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.