The pair slipped 0.44% to 1.0230, after the HSBC flash reading of China’s April purchasing managers index. The flash HSBC Purchasing Managers’ Index for April fell to 50.5 from 51.6 in March. The April reading is ahead of the February reading of 50.4. The new export orders index fell to 48.6 in April from 50.5 in March, highlighting the fact that the global economic recovery remains tepid. China‚Äôs PMI report comes barely more than one week after the country said its first-quarter GDP grew by 7.7%, disappointing analysts that expected growth of 8%. For the Aussie, the China PMI comes just a day after the it was revealed that a budget deficit down under is all but a foregone conclusion for the current fiscal year. Australian Federal Treasurer Wayne Swan said the government there has taken a AUD7.5 billion revenue hit since October. Late last year, Australian bankers and policymakers abandoned hopes for a possible budget surplus in the current fiscal year. There is some speculation that the budget deficit could be as high as AUD20 billion, though Deloitte Access Economics said that figure is too high. The budget deficit could be the result of declining mining revenue and government spending on programs such as education, health care and infrastructure. Australia‚Äôs next budget is scheduled to be released on May 14. Given news of the deficit and the recently concerning Chinese economic data points, some traders may look to the Reserve Bank of Australia to perhaps lower interest rates when it meets early next month. However, the majority of market participants expect RBA to stand pat and hold interest rates at 3%. AUD/JPY dipped 0.55% to 101.41 while EUR/AUD gained 0.25% to 1.2756.
EasyForexNews Research Team