The Australian dollar bounced back after strong manufacturing data from China, which is a major trading partner and biggest export market for Australia. A report showed manufacturing rose in the world’s second largest economy. China’s official PMI rose to 51 in February, its highest since September, marginally beating forecasts of 50.7. This helped lift AUDUSD from earlier lows of 1.0714 to an Asian session high of 1.0762.
Elsewhere in other major currencies, the US dollar strength dominates markets on the back of U.S. Federal Reserve Chairman Ben Bernanke’s comments in a testimony to the U.S. Congress late on Wednesday. Bernanke failed to signal more stimulus measures, and led to speculation that there will not be a third round of quantitative easing any time soon. No more bond buying by the Fed means the dollar will not weaken any further and thus gained against most risk currencies. The ICE Dollar index, which measures the dollar against a basket of six major currencies rose to 78.712, above Wednesday’s 78.095.
The euro retraced slightly against the dollar to pare some losses after a 1 percent slide on Wednesday. EURUSD plunged to 1.3313 in New York trading and opened in Asia at 1.3322 to edge up to1.3355.
Sterling was flat against the dollar after dropping yesterday. GBPUSD traded a 1.5909-1.5933 range. The focus will be on U.K. manufacturing PMI later today, which will give the pound a clearer direction.
Dollar extended gains against the yen in Asia after a 1 percent jump following Bernanke’s speech. USDJPY hit an early Asian session high of 81.38 before easing to 80.83, after the Japanese currency was boosted following strong Japanese data. Japan’s capital spending excluding software rose 4.9 percent from a year earlier in the final three months of 2011, after declining 11 percent in the previous quarter.