Forex - Aussie gains on HSBC China survey yen up on Saudi king's death

Investing.com - The Australian dollar gained on Friday after a gauge on Chinese manufacturing showed hints of an uptick.

The HSBC January initial estimate came in at 49.8, compared to December's final of 49.6, but the January flash output index ticked up to 50.1 from 49.9 in December, placing it just in expansion territory above 50.

"Domestic demand improved marginally while external demand remained solid," said Hongbin Qu, Chief Economist, China and joint head of Asian economic research at HSBC. "The labor market weakened and prices fell further. Today's data suggest that the manufacturing slowdown is still ongoing amidst weak domestic demand. More monetary and fiscal easing measures will be needed to support growth in the coming months."

Separately, the Japanese yen held slightly stronger in Asia on Friday after the death of Saudi Arabia's King Abdullah, a key U.S. ally on diplomacy and oil policies that raised questions about whether the succession plan would keep the bonds tight.

AUD/USD traded at 0.8033, up 0.12%, while USD/JPY changed hands at 118.33, down 0.16%, on safe-haven buying. EUR/USD traded at 1.1365, up 0.03%.

Later in Japan, at 1300 Tokyo time (0400 GMT), Japan's former economic and fiscal policy minister, Hiroko Ota, speaks on the outlook for the Japanese economy and
Abenomics at the Foreign Press Center.

Overnight, the dollar climbed to fresh 12-year highs against the other major currencies on Thursday, after the release of relatively positive U.S. jobless claims data and as the European Central Bank announced a large scale quantitative easing program.

In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending January 17 decreased by 10,000 to 307,000 from the previous week’s total of 317,000.

Analysts had expected initial jobless claims to decline by 17,000 to 300,000 last week.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted down 0.26% at 94.41 in early Asia.

EUR/USD tumbled 1.41% after ECB President Mario Draghi said it will make monthly purchases of €60 billion per month, starting in March and continuing until late 2016.

Draghi acknowledged the action the ECB took last year was “insufficient” to ward off the threat of deflation in the region. The annual rate of inflation in the euro area fell into negative territory last month, dropping 0.2%.

Draghi said the risks to the euro area recovery remain to the “downside” but added that today’s action should bolster the outlook. He noted that lower oil prices should help households and support a wider recovery.