Forex Asia Review – Dollar advances against yen for second day

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USDJPY bounced further away from 2-1/2-month lows to rise a high of 80.39 in the Asian session. The dollar was boosted after stronger than expected US manufacturing ISM data on Tuesday and any further gains will depend on upcoming US job numbers. Later today we have the ADP employment data and on Friday the key non-farm payroll report. If the numbers are strong enough to push back quantitative easing expectations by the Fed then dollar could continue to advance.

 

Euro has been range trading above the key psychological $1.32 level for the past four days ahead of important events this week.  On the economic calendar today we have euro zone manufacturing PMI data. Tomorrow is the European Central Bank policy meeting, US payrolls on Friday and elections in Greece and France on Sunday. All these events make investors reluctant to take risk aggressively, especially because Spain’s fiscal situation has yet to be resolved. EURUSD opened in Asia at 1.3235 and drifted lower to 1.3209 and before bouncing again slightly.

 

GBPUSD traded a tight range between 1.6214 and 1.6234, down from an eight-month high of 1.6300 reached on Monday. Sterling was hurt yesterday after weaker than expected UK PMI data.

 

The Australian dollar attempted to claw back some losses made after the Reserve Bank of Australia cut rates by 50 basis points on Tuesday. There was little reaction to China’s HSBC manufacturing PMI today. The index showed a slight improvement though still remained below 50, which is a contraction phase.  China is Australia’s biggest trading partner and so the aussie is sensitive to data from China. AUDUSD opened in Asia at 1.0332 and only slightly edged up to 1.0349 after the data.