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Forex - Australian dollar down sharply after building approvals

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Shutterstock photo - - The Australian dollar fell sharply after disappointing building approvals data, while the yen weakened against the dollar despite strong business investment data.

In Australia, the AIG manufacturing is due for May rose 4.4 points to 49.2, compared with a reading of 44.8 in the previous month. April building approvals in Australia fell 5.6%, far below the 1.8% gain expected month-on-month, compared to a decline of 3.5% the previous month.

AUD/USD traded at 0.9270, down 0.42%, after the data.

Figures on capital spending in Japan showed a gain of 7.4% for first quarter non-financial capital spending, compared to a forecast of a 5.7% increase.

Business investment in equipment has been on a moderate uptrend,

backed by rising corporate profits, and is expected to continue improving. But it is uncertain how soon exports will pick up and how quickly domestic demand will rebound after an expected slump in April-June because of an increase in the sales tax to 8% on April 1 from 5%.

Japan's May PMI is also due with a reading of 49.9 expected, unchanged from the previous month.

USD/JPY traded at 102.03, up 0.26%, after the data.

At the weekend, the China Federation of Logistics and Purchasing said its May PMI rose to a five-month high of 50.8, beating expectations of a gain to 50.6 from 50.4 in April.

"The continuous rebound of PMI in May suggested economic recovery

trend is clear...But decline in inventory and business outlook showed companies are cautious with economic outlook and there is no condition for a sharp rebound in economic growth," said Zhang Liqun, a government economist advising the CFLP in an accompanying statement.

The US Dollar Index held at 80.49, up 0.07%.

Last week, the dollar moved lower against the euro, but still notched up weekly gains against the single currency amid widespread expectations for monetary easing by the European Central Bank at its upcoming policy meeting.

Data on Friday showing that the annual rate of inflation in Italy and Spain slowed in May underlined expectations that the ECB will take steps to tackle low consumer price growth, which is threatening the fragile recovery in the euro zone.

The dollar eased on Friday after data showed that U.S. consumer spending fell 0.1% in April from a month earlier, missing forecasts for a 0.2% increase. Personal income rose 0.3%, in line with forecasts.

Separately, the final reading of the University of Michigan's consumer-sentiment index for May came in at 81.9, up slightly from a preliminary reading of 81.8, but falling short of forecasts for 82.5.

In the week ahead, investors will be looking to Friday's U.S. nonfarm payrolls report for May for further indications on the strength of the labor market, while Tuesday's euro zone inflation report will also be in focus, ahead of the ECB policy meeting and press conference on Thursday.

On Monday, markets in China are to remain closed for a national holiday.

Japan is to publish data on capital spending.

Australia is to release data on building approvals and company operating profits.

In the euro zone, Germany is to release preliminary data on consumer price inflation, while Spain and Italy are to produce data on manufacturing activity.

Elsewhere in Europe, Switzerland is to publish its SVME index while the U.K. is to release what will be a closely watched manufacturing report. The U.K. is also to release data on net lending and mortgage approvals.

Later Monday, the Institute of Supply Management is to publish a report on U.S. manufacturing activity. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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