Forex - Aussie up slightly ahead of HSBC China PMI, PBOC effects eyed

Investing.com - The Australian dollar was up slightly in early Asia on Thursday ahead of manufacturing data in top export destination China with investors looking to see if easier central bank policies since November are flowing through the economy.

AUD/USD traded at 0.7877, up 0.04%, while USD/JPY changed hands at 121.22, down 0.09%.

In China, the May HSBC flash manufacturing PMI is due at 0945 local time (0145 GMT). The April reading was disappointing with HSBC PMI dropping to a one-year low of 48.9. The People's Bank of China has cut interest rates three times since November last year to keep the economy on track.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.02% to 95.68.

Overnight, the dollar remained broadly higher against a basket of other major currencies on Wednesday, as the previous session's upbeat U.S. data fuelled optimism over the strength of the economy and as markets eyed the Federal Reserve's upcoming policy statement.

The greenback strengthened after the U.S. Commerce Department said on Tuesday that the number of building permits issued last month increased by 10.1% last month to 1.143 million units from March's total of 1.038 million.

The report also showed that U.S. housing starts soared by 20.2% in April to hit 1.135 million units from March's total of 944,000 units, easily surpassing expectations for an increase of 9.9%.

The single currency weakened as Athens was still scrambling to reach an agreement with its international lenders over economic reforms they say must be implemented before the final €7.2 billion tranche of the country's €240 billion bailout is released.

Greece is due to make a €305 million payment to the International Monetary Fund on June 5, but will default if a deal is not reached by then.

The euro was also hit after senior European Central Bank policymaker Benoit Coeure said on Tuesday that the central bank is planning to speed up the pace of its bond-buying stimulus program before the summer in order to avoid the "notably lower market liquidity" in late July and August.