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Forex - Australian dollar weaker ahead of building approvals data

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Investing.com -

Investing.com - The Australian dollar was a tad weaker early in Asia on Monday despite strong manufacturing data out of China, its main trading partner for natural resources like iron ore.

In Australia, the AIG manufacturing is due for May with a reading of 44.8 in the previous month. That is followed by building approvals with a 1.8% gain expected month-on-month, compared to a decline of 3.5% the previous month.

AUD/USD traded at 0.9306, down 0.04%, ahead of the data.

Figures on capital spending in Japan are also due with a forecast of a 5.7% increase, compared to a 4.0% gain the previous month. Later, in Japan, the country's May PMI is due with a reading of 49.9 expected, unchanged from the previous month.

USD/JPY traded at 101.83, up 0.06%, ahead of 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 80.47, up 0.04%.

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.

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.

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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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