• The Aussie Dollar treads water near one-month lows after having lost more than 2% this week.
• China’s Caixin manufacturing PMI confirmed that the sector’s activity contracted in July.
• The NFP, due later today, is expected to show a slight moderation in job creation in July.

The Aussie Dollar remains depressed near one-month lows at 0.6425 against its US peer, consolidating losses after having depreciated beyond 2% so far this week. A mild risk aversion and more downbeat data from China are weighing on the risk-sensitive AUD ahead of the release of the US Nonfarm Payrolls report.

Market sentiment remains subdued on Friday as US President Trump signed a new list of trade tariffs that will come into effect next week. Australian products will face a benign 10% levy, but the hefty 50% tariffs to China, Australia's main trading partner, are expected to weigh on Australia's trade-oriented economy.

Weak manufacturing data from China is weighing on the AUD

In the macroeconomic domain, data released on Friday revealed that Australian Producer Prices rose at a 3.4% yearly rate in the second quarter, the softest reading since the third quarter of 2021.

The Aussie, however, was hit by further evidence of the weak manufacturing activity in China as the Caixin Manufacturing PMI declined to 49.5 in July from 50.3 in June, entering into contraction levels against expectations.

These figures confirm the grim NBS manufacturing activity figures released on Thursday, highlighting a decline in export orders combined with a weaker domestic demand that poses a significant threat to the country’s economic outlook.

    The US Dollar, on the other hand, remains firm, buoyed by lowering expectations of Fed rate cuts, following this week’s monetary policy decision, and a cautious market, with all eyes on the US NFP report.

The market consensus anticipates a slowdown in job creation in July, with 110,000 new payrolls, from 147,000 in the previous month, and the Unemployment Rate ticking up to 4.2% from the previous 4.1%. The final figures will provide more cues about the Fed’s September meeting, and are likely to boost USD volatility.