China's Caixin Services PMI eased to 52.5 in April as anticipated, according to data compiled from Caixin Institute of Economic Research.

China’s Services Purchasing Managers’ Index (PMI) fell slightly to 52.5 in April from March’s reading of 52.7, according to data published by Caixin on Tuesday. This decline fell in line with market expectations during this time.

Reaction of AUD/USD to China Services PMI data.

At time of writing, the Australian Dollar/United States Dollar pair had increased 0.08% on its day to trade at 0.6615.

Australian Dollar (AUD) FAQs
One of the main drivers for its value, including interest rates set by Reserve Bank of Australia (RBA), are interest rate levels set by RBA. Being resource-rich country, another important determinant for Australia’s AUD is price of its primary export – Iron Ore. Inflation, growth and trade Balance data is all also influential determinants; along with market sentiment (whether investors prefer riskier assets vs safer havens; with risky on being positive to its AUD). Market sentiment can also have significant effects upon its value against its counterpart – risky assets being the major drivers behind any currency’s performance against it’s counterpart; risk off tending positively affects its AUD.

The Reserve Bank of Australia (RBA) affects the Australian Dollar by setting the lending interest rates between Australian banks, which in turn influences economy-wide interest rates. Their primary aim is to maintain stable inflation at 2-3% by changing interest rates accordingly; relative high lending interest rates support the AUD and relative low ones do not; using quantitative easing/tightening programs or quantitative tightening as credit conditions change can have both positive/negative AUD effects depending on its timing; any of which could cause fluctuation within Australia’s economy and affect exchange rate fluctuations as it influences economies across borders — all while keeping inflation levels between 2-3% and 2-3% stable.

China is Australia’s primary trading partner and so its economic health plays a decisive role in shaping its currency value (AUD). When China purchases more raw materials and goods and services from Australia when their growth exceeds forecasted rates; when its economy under performs due to unexpected factors it tends to purchase less from Australia thereby pushing its value lower; conversely a slower-than-expected economic expansion can have negative ramifications, having direct bearing upon AUD value or pairs thereof. Positive or negative surprises from Chinese growth data often has direct consequences when translated to changes in Australia Dollar pairs or its pairs!

Iron Ore is Australia’s primary export, accounting for $118 billion annually according to data from 2021 and with China as its principal destination. Therefore, Iron Ore prices serve as a proxy for Australian Dollar movements: as aggregate demand rises when prices of Iron Ore rise, so too does aggregate demand rise with it; conversely if prices of Iron Ore decrease this can bring about negative implications on demand and ultimately the currency; with higher Iron Ore prices leading more likely than lower ones towards positive Trade Balance figures which likewise benefiting the Australian Dollar as a whole.

Trade Balance, defined as the difference between earnings from exports compared to imports, can have a profound effect on the Australian Dollar’s value. When Australia exports highly sought-after exports that draw foreign buyers in excess of what’s spent to purchase imports from elsewhere. Therefore, a positive net Trade Balance strengthens AUD, with negative ones having the opposite result.