Australian Dollar Falls On Weak Chinese PMI Data

(RTTNews) - The Australian dollar weakened against other major currencies in the European session on Tuesday, after China's service sector grew at the slowest pace in seven months in April as disruptions to goods trade amid fresh tariffs negatively impacted new work of some service providers.

Data from S&P Global showed that the Caixin Services Purchasing Managers' Index fell to 50.7 in April from 51.9 in March. The reading was forecast to drop moderately to 51.7.

The score suggested that the sector continued to expand for 28 straight months. However, the pace of growth eased to the softest since last September.

The survey showed that overall private sector activity grew at the slowest pace in three months. The composite output index posted 51.1 in April, down from 51.8 in March.

Growing anticipation that the Reserve Bank of Australia (RBA) will lower its Official Cash Rate (OCR) at the policy meeting later this month, also led to the downturn of AUD.

Investors watched the latest developments in trade negotiations and awaited further policy action from Beijing to boost consumption.

Traders also wait for the two-day policy meeting of the Federal Reserve starting later today. Interest rates are predicted to remain unchanged by the Fed on Wednesday.

In the European trading today, the Australian dollar fell to 5-day lows of 1.0781 against the NZ dollar and 92.21 against the yen, from early highs of 1.0849 and 93.05, respectively. If the aussie extends its downtrend, it is likely to find support around 1.06 against the kiwi and 86.00 against the yen.

The aussie edged down to 1.7576 against the euro, from an early low of 1.7486. On the downside, 1.84 is seen as the next support level for the aussie.

Against the U.S. and the Canadian dollars, the aussie dropped to 0.6442 and 0.8905 from early lows of 0.6472 and 0.8939, respectively. The next possible downside target for the aussie is seen around 0.60 against the greenback and 0.86 against the loonie.

Looking ahead, Canada and U.S. trade data for March, Canada Ivey PMI data for April, U.S. Redbook report and U.S. RCM/TIPP Economic Optimism index for May are slated for release in the New York session.