A notably disappointing PMI in China put pressure on AUD last night. AUD-USD eased to the lowest level in about six years at 0.7272. After all the leading indicator causes doubts about the recently positive Chinese GDP data and is thus causing confusion.
According to Commerzbank, "We have always been quite honest about the fact that we are still cautious about official Chinese data. And after all China is by far the Australia's most important trading partner. Moreover Standard & Poor´s has signalled that Australia's AAA rating might be at risk should it be unable to find a solution for the budget disagreements or should it be hit by an external shock."
A hard landing in China would probably constitute a scenario under which Australia would have to worry about its top ranking. Of course that also led to a rise in expectations of a Reserve Bank of Australia rate cut on 1st September. Therefore, Commerzbank expects AUD to be traded weaker in the near future.
