THE Australian dollar closed lower after a survey showing a drop in a Chinese manufacturing prompted investors to sell commodity-driven currencies on concerns about a slowdown in the Asian economy.
At 5pm (AEST) today, the Australian dollar was trading at $US0.8384, down 0.97 per cent from yesterday's close of $US0.8465.
Since7am (AEST) today, the local unit traded between $US0.8354 and $US0.8475.
Today, the state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, fell to 53.9 in May from 55.7 in April.
The index has remained above the 50 level for 15 straight months after a slowdown in late 2008 and early 2009.
Another survey, the HSBC China Manufacturing PMI - a seasonally adjusted index designed to measure the performance of the manufacturing economy - fell to 52.7 from a revised figure of 55.2 in April.
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Although numbers above 50 for both surveys show manufacturing activity expanding, the declines indicate an easing in the pace of expansion.
"The PMI gave some concerns that the (Chinese) economy may not be spending as fast and that there may be some slowdown in the months ahead," senior corporate dealer with financial markets research group 4Cast, Lee Wai Tuck, said from Singapore.
"This is weighing on risk aversion."
Equity markets in Asia closed lower, with Australia's benchmark S&P/ASX200 index down 0.37 per cent, while Japan's Nikkei-225 index was 0.58 per cent lower.
Any signs of a slowdown in China's economy weakens the local dollar as the Asian nation is the biggest market for Australian exports, particularly for mineral resources.
Mr Lee said the Australian dollar received a small lift following the Reserve Bank of Australia's (RBA) decision to keep the cash rate unchanged at 4.5 per cent, which was widely expected.
The RBA has now paused on the interest rate button after a run of three consecutive monthly rises.
Economic events due in the US today include the Institute for Supply Management's manufacturing survey for May.
The median forecast is for an index reading of 59.5, down from 60.4 in April, but still above the benchmark 50 level that separates expansion from contraction.
Mr Lee forecast the Australian dollar to trade between $US0.8280 and $US0.8420 during today's offshore session.
"Overall, the (current) risk for the Aussie is on the downside," he said.
Dollar down at noonProblems spotted in economic revival
