AUD/USD Falls After Weak China Data and Low Aussie Inflation
The Australian Dollar (AUD) dropped again on August 1, 2025, marking a seven-day losing streak. This fall came after weak economic reports from both Australia and China.
Australia’s Producer Price Index (PPI) rose by just 0.7% in the second quarter, which was less than the expected 0.9%. On a yearly basis, PPI also slowed to 3.4% from 3.7%. At the same time, China’s Caixin Manufacturing PMI dropped to 49.5 in July, below the 50 mark that separates growth from decline. This raised worries about slowing demand in China, a key trading partner for Australia.
On a positive note, Australia’s retail sales for June rose 1.2% month-on-month, stronger than expected. But it wasn’t enough to support the AUD/USD pair, which continued to weaken.
Meanwhile, the US Dollar gained strength. The US Dollar Index (DXY) stayed near 100.00, supported by solid US economic data. The Personal Consumption Expenditures (PCE) inflation rose 0.3% monthly, while the economy grew 3.0% annually. The Federal Reserve also kept interest rates steady at 4.25–4.5%.
Traders are now focused on the upcoming Nonfarm Payrolls (NFP) report, expected to show strong US job growth, which could impact currency markets.
Impact:
AUD/USD might stay weak due to soft China and Australia data. If the US NFP report is strong, the US Dollar could possibly rise further, pressuring AUD.
