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Forex - Aussie weaker after AI Group index, China HSBC PMI awaited

Published 08/31/2014, 08:59 PM
Updated 08/31/2014, 09:01 PM
Australian dollar weaker

Investing.com - The Japanese yen held weaker along with the Australian dollar Monday in Asia with the Ukraine in focus and data from Australia, Japan and China trickling in on a busy day and with markets in the U.S. and Canada closed for the Labor Day holiday.

USD/JPY traded at 104.13, up 0.05%, while AUD/USD changed hands at 0.9330, down 0.08%.

U.S. officials are working closely with the European Union to keep their Russia sanctions programs aligned in timing and severity.

On Saturday, European Union leaders agreed to draw up options within a week for possible new sanctions against Russia, with action to follow quickly unless Moscow takes clear steps to scale back its intervention in Ukraine. Reports have emerged that hundreds of Russian soldiers have entered Ukraine.

European Council President Herman Van Rompuy said the bloc wouldn't set out specific criteria for triggering fresh sanctions but said there was "determination" to ensure Russia paid an appropriate price for heightening tensions.

"I can assure you that everyone is fully aware that we have to act quickly given the escalation on the ground," he said at the end of a summit of European leaders.

In Australia, the AIGroup manufacturing index fell 3.4 points to 47.3, slipping into contraction just a month after it moved into expansion at 50.7 after eight months.

The TD-MI inflation gauge was flat in August, after the gauge rose 0.2% month-on-month.

Second quarter business inventories are then due at 1130 (0130 GMT) with a 0.2% gain expected and then the Reserve Bank of Australia commodity index at 1630 (0630 GMT).

In Japan, capital spending rose 3.0%, below and expected 3.8% gain and then the manufacturing index seen at 52.4.

In China, the August CFLP manufacturing PMI came in at 51.1, just a nick below the 51.2 exepected.

This would be followed by the HSBC final manufacturing PMI at 0945 (0145 GMT) with 50.3 expected, unchanged from the previous month final.

Last week, the dollar ended the week close to one year highs against the euro as largely upbeat U.S. data indicated that the economic recovery is on track, while soft euro zone inflation data and concerns over the Ukraine crisis pressured the single currency lower.

The dollar was boosted after data showed that U.S. consumer sentiment rebounded in August, with the final reading of the University of Michigan’s consumer confidence index rising to 82.5 from 81.8 in June.

The data offset another report showing that U.S. consumer spending unexpectedly fell 0.1% in July.
The single currency remained under pressure after official data earlier on Friday showed that the annual rate of inflation in the euro area slowed to a five year low of 0.3% in August from 0.4% in July.

The US Dollar Index traded at 82.80, up 0.08%.

In the week ahead, trading volumes are likely to remain light on Monday, with U.S. markets closed for the Labor Day holiday. Investors will be focusing on Thursday’s outcome of the ECB’s monthly monetary policy meeting, as well as Friday’s closely watched U.S. nonfarm payrolls report.

Monetary policy announcements by central banks in Australia, Japan, Canada and the U.K. will also be awaited.

On Monday, the U.K. is to publish data on manufacturing activity, as well as a report on net lending.

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