The dollar edged mostly higher on Thursday, after weakness in a key early gauge of Chinese manufacturing, though it slipped some against the Japanese yen.
The ICE dollar index DXY, which measures the greenback against a basket of six major currencies, traded at 79.300, from 79.113 in late trading on Wednesday.
On Thursday, a preliminary version of HSBC’s Chinese manufacturing PMI survey came in at 47.8 in September. It was just up from a 47.6 reading for the survey in August, but still well below the 50 mark that separates economic expansion from contraction. Read more on China PMI.
HSBC chief China economist Hongbin Qu said in a note accompanying the PMI release that “manufacturing growth is still slowing, but the pace of slowdown is stabilizing.”
Strategists at RBC Capital Markets said “the initial reaction to a very modest rise in the flash estimate of China’s September manufacturing PMI was muted at best but there has been little else on which to blame the souring in markets since then.
“The U.S. dollar is modestly bid as is the Japanese yen with the Australian dollar underperforming amidst Asian equity markets which are in the red,” the strategists said.
Against the yen, the dollar USDJPY traded at ¥78.22, down from ¥78.36 in late trading Wednesday.
The dollar gained against the yen on Wednesday after the Bank of Japan expanded its asset purchase program while keeping interest rates at ultra-low levels.
However, yen strength soon reasserted itself, with analysts saying that the BOJ moves weren’t aggressive enough to counter the U.S. Federal Reserve easing that has pushed the dollar lower over the past week.
“Investors believe that the BoJ’s action is not bold enough when compared with the scale of ECB and Fed’s easing program,” said Kintai Cheung, strategist at Credit Agricole.
“For the day ahead, attention will likely turn to the data front, with eurozone PMIs and U.S. Philly Fed Index in focus. These surveys are expected to improve modestly, keeping sentiment supported likely,” said Cheung at Credit Agricole.
The euro EURUSD reached $1.3012, from $1.3051 late the previous session.
With an auction of 10-year Spanish debt due Thursday, Michael Hewson, strategist at CMC Markets said a disappointing outcome may bring market attention back to Europe’s debt troubles.
If the auction goes well, however, “then we could face a long wait until Spanish Prime Minister Mariano Rajoy feels compelled to seek help for Spain’s ailing economy,” he added.
The British pound GBPUSD traded at $1.6204, down from $1.6218, with August retail sales due.
The Australian dollar AUDUSD reached $1.0407, from $1.0483 in late trading in Wednesday, pressured by the Chinese PMI data.
Marketwatch
