Forex - Aussie up slightly despite weak AI Group manufacturing survey

Investing.com - The Australian dollar posted small gains on Monday despite the AI Group manufacturing index easing in an otherwise light data day in Asia.

The AI Group December manufacturing index fell 3.2 points to 46.9. AUD/USD traded at 0.8093, up 0.02%, while USD/JPY changed hands at 120.07, down 0.36%.

Last week, the euro fell to four-and-a-half year lows against the dollar on Friday, and the greenback rose to parity against the Swiss franc after European Central Bank President Mario Draghi indicated that the likelihood of quantitative easing has increased.

In an interview with German financial newspaper Handelsblatt Draghi said the risk of the ECB not fulfilling its mandate of price stability is higher now than six months ago. The remarks indicated that the central bank is moving closer to implementing quantitative easing measures in order to spur growth and inflation.

The annual rate of euro zone inflation was just 0.3% in November, well below the ECB’s target. EUR/USD traded at 1.1967, down 0.30% on Monday.

The single currency was also pressured lower after data showed that manufacturing activity in the euro area grew at a slower rate than initially estimated in December, adding to concerns over the outlook for fourth quarter growth.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, rose 0.16% to 91.62. The index rallied 12% in 2014, boosted by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market. Wednesday’s Federal Reserve meeting minutes will be also closely watched, while the euro zone is to publish preliminary data on consumer prices.

On Monday, in the euro zone, Germany is to publish preliminary data on consumer price inflation, while Spain is to report on the change in the number of people employed. The U.K. is to release data on construction sector activity.