Aussie and Kiwi Fall on Slowdown in China's Manufacturing Activity

The Aussie and the Kiwi fell on Friday, as China's manufacturing activity started to cool down. At around 8 am GMT, the U.S. dollar rose 0.13% against the Aussie to stand around 0.9337. At the same time, the greenback added 0.36% to its value against the Kiwi, trading at 1.2101. Both the Aussie and the Kiwi were hit by a slowdown in China's manufacturing activity. Today's data showed that

declined to 50.9 in June, its lowest level in the past 28 months, from 52 in May. The slowdown in the expansion of China's manufacturing activity is the result of a weakening global demand and China's attempts to control its inflation by tightening its monetary policy. China is the world's largest consumer of raw materials and its economic boom is depending a lot on commodities from Australia and New Zealand. A slowdown in China has forced the currencies of Australia and New Zealand into retreat, since demand for their main exports has fallen. The Kiwi and Aussie were under more pressure from falling commodity prices. Gold has fallen below the psychologically important $1,500 barrier. At the moment, it trades around $1,493.65, down 0.45%, while silver's fall was even steeper, sliding 1.12% to $34.27. Fossil fuels were on a decline as well. Crude oil is trading below $95 once more, after falling 0.46% to stand around $94.56, while natural gas suffered heavier losses, following its 1.1% fall to $4.332. Copper is the one exception today, as its price rose 0.27% to $4.28. The Aussie failed to find support in improving performance of Australia's manufacturing sector. Today's data showed that

rose to 52.90% in June, up from 47.70% in May. The latest data will be seen as a sign that the Australian economy is recovering from the effects of devastating floods in Queensland. Australia and New Zealand have managed to go through the financial crisis relatively unharmed, at least compared to Europe and the United States, but its economies have to fight hard to shake off the effects of natural disasters, which have caused havoc in some parts of Australia and New Zealand. It is encouraging that some domestic indicators show their economies are getting more successful in getting back to pre-disaster growth rates. Analysts will be more worried by overseas indicators, however, above all in China, which is becoming increasingly important trading partner for countries exporting commodities. Traders who believe that the government reconstruction programs will continue to provide enough steam for the economies of New Zealand and Australia, pushing the value of their currencies higher, will be interested in the WisdomTree Dreyfus New Zealand Dollar Fund

and the CurrencyShares Australian Dollar Trust ETF

. Other traders will be more focused on evidence of global slowdown, especially in China, which should depress demand for the countries' commodity exports. As a result, traders who believe in this scenario will be more interested in the ETFS Short Australian Dollar Long US Dollar ETC (Sterling) ETF (SAUP) and the ETFS Short New Zealand Dollar Long US Dollar ETC ETF (

).