Investing.com - The Australian dollar retraced from lows in midday Asian trade on Monday as private think tank data showed an economy recovering moderately with signs of inflation gathering pace.
AUD/USD fell to 0.8919, off 0.10%, recovering from morning trade. USD/JPY traded at 101.41, down 0.37% and NZD/USD traded at 0.8378, down 0.31%, as terms of trade data came in better than expected.
In New Zealand, the terms of trade index for the fourth quarter rose 2.3%, beating expectations of a 1.9% gain.
In Australia, the AI manufacturing index for February rose 1.9 points to 48.6, staying in contraction for the fourth month in a row.
"Major efforts are now needed both by businesses and governments to lift the pace of innovation, to build business capabilities and to lift workforce skills in manufacturing and in other trade exposed sections of the economy. It is critical that we rebuild and recapitalize the sector and position it to take advantage of new opportunities and to assist in the task of rebalancing the economy which has become over-exposed to the fortunes of the mining sector," AI Group chief executive Innex Willox said.
The TD-MI inflation gauge in Australia for February rose 0.2%, taking the annual figure to 2.7%, above the mid-point of the Reserve Bank of Australia 2% to 3% target band.
"In tandem, GDP growth is shaping up to end 2013 on a decent note, approaching a return to trend 3%. Leading housing indicators are accelerating, consumption remains supportive for growth and the star performer will be the trade sector, all offsetting the peak in mining investment. As inflation is already above the mid-point of the RBA target band, we expect the RBA to begin withdrawing some extraordinary stimulus by year end, and we target a cash rate of 3.0% by December," TD Securities head of Asia-Pacific Research Annette Beacher said.
The February Australia ANZ job ads survey rose 5.1%.
In China, the CFLP China services PMI rose to 55 from 53.4 the previous month and the HSBC China manufacturing PMI reached 48.5 from 48.3 previously. oth items cover the month of February.
Manufacturing activity in China fell less-than-expected last month, official data showed on Saturday that Chinese Manufacturing PMI fell to an eight-month low of 50.2 in February from 50.5 in the preceding month. Analysts had expected Chinese Manufacturing PMI to fall to 50.1 last month.
The U.S. dollar index traded at 79.84, up 0.04%.
The U.S. dollar ended the week lower against most of the other main currencies on Friday after data showed that U.S. fourth quarter growth was revised lower, adding to worries that the Federal Reserve may slow the pace of reductions to its stimulus program.
The euro was boosted after data on Friday showed that the annual rate of consumer inflation in the euro zone rose 0.8% in February, above expectations for a reading of 0.7%. The inflation rate is still well below the European Central Bank’s 2% target, but the data eased pressure on the bank to tighten monetary policy at its upcoming policy meeting on Thursday.
Later in the day, the U.K. is to release data on manufacturing activity and net lending to individuals, while Switzerland is to publish its SVME index.
In the euro zone, Spain and Italy are to release data on manufacturing activity. Meanwhile, ECB President Mario Draghi is to speak in the European Parliament in Brussels.
Canada is to produce data on raw material price inflation. The U.S. is to release data on personal spending, while the Institute of Supply Management is to release data on manufacturing activity.