According to the National Australia Bank Business Survey, confidence by the Pacific economy’s manufacturers and business leaders sank in the month of May.  Headline survey results fell 4 points to stand at a -4 reading while the index of confidence subcomponent plunged by 6 points to a -2 standing.  The readings are the weakest in three years for the country as mining and construction sectors are showing signs of a slowdown.

Even with Beijing leaders lowering interest rates last week, expectations continue to remain high that the current contraction in China will continue through the yearend.  The anticipation isn’t positive for Australia, one of China’s major trade partners in iron ore and coal.

Further slowdowns in the Australian economy are expected to push RBA officials to consider further rate cuts in the near term, even after Governor Glenn Stevens cut benchmark rates to multiyear lows of 3.5%.

Despite the news, the Australian dollar remains supported for the moment, trading above the 0.9850 recent low at 0.9886.

More on Asian currencies - What A Chinese Rate Cut Means For FX