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    Asian Session – Dollar regains ground versus yen, euro awaits PMIs

    Posted on February 2, 2015 by the XM Investment Research Desk at 7:39 am GMT

    chinejiThe dollar regained some ground after briefly dipping below the 117 level at 116.87.  The dollar was last buying 117.66 yen in what was a volatile session.  In yen-related data, Japanese manufacturing PMI climbed to 52.2 in January.

    Euro / dollar was more stable around the 1.13 level, as PMI numbers and developments in Greece were awaited.  Chances of a deal between Greece and its creditors suffered a setback on Friday when the Greek finance minister said the country would refuse to deal with the Troika of international lenders that is responsible for managing the bailout.  On Saturday though, the new Greek Prime Minister said the country would not default on its debts.

    The Australian dollar managed to recover against the US dollar during the Asian session and pull away from the 0.7718 5 ½ year low.  The aussie traded at 0.7786.  This was despite news that China’s official manufacturing PMI dipped into negative territory during January, dropping to 49.8 from 50.1 the previous month.  Non-manufacturing PMI, which was also released on Sunday, rose on the other hand to 49 from 46.9.  The HSBC manufacturing PMI, released on Mondayshowed a smaller drop to 49.7 from 49.8.  Both official and private-sector surveys therefore showed that China’s manufacturing sector is currently in contraction territory right now – even if the surveys are only slightly lower than the 50 contraction / expansion line.  China is a major importer of commodities and Australia’s most significant export destination.

    Commodity currencies overall did not seem to be benefitting much from the short-covering rally that led oil to jump 8% higher on Friday.  The move took place after the rig count in the United States fell by more-than-expected; signaling a reduction in shale oil supply ahead.

    Looking ahead, the Eurozone Markit manufacturing PMI for January (final) will attract attention, followed by the UK manufacturing PMI.  US manufacturing PMI (Markit) and ISM manufacturing will be announced during the US session.  Personal consumption and income for January will come out, including the all-important Personal Consumption Expenditure price index followed closely by the Fed.

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