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Forex - Australian dollar weaker ahead of inflation survey, China PMI

Published 05/21/2014, 07:12 PM
Updated 05/21/2014, 07:15 PM
Australian dolalr a tad weaker in early Asia
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Investing.com - The Australian dollar held a tad weaker on Thursday ahead of a private survey on inflation expectations and flash manufacturing data on top export destination China.

AUD/USD traded at 0.9244, down 0.07%. while USD/JPY traded at 101.44, up 0.05%.

At 1100 in Sydney (0100 GMT), Australia's May MI inflation expectations are due. The last survey showed annual inflation expectations at 2.4%, the bottom half of the RBA's band of 2% to 3%.

China's HSBC May flash manufacturing PMI is due at 0945 local time (0145 GMT) with expectations of a stable figure from last month. The final April reading came in at 48.1, suggesting that conditions deteriorated from the flash 48.3 released a week earlier as the economy slowed further.

The Bank of Japan's May economic report is due at 1400 (0500 GMT).

Overnight, the dollar trimmed gained against most major currencies though remained largely higher after the minutes from the Federal Reserve's latest policy meeting revealed monetary authorities are preparing to normalize policy though rate hikes aren't on any timetable.

The Federal Reserve Board of Governors agreed at their April policy meeting that the time has come to discuss ways to wrap up monetary stimulus programs, though rate hikes aren't on the drawing board yet, as no inflationary risks have become evident due to ultra-loose policies.

The Fed is currently purchasing $45 billion in Treasury and mortgage debt a month to spur recovery, a monetary policy tool known as quantitative easing that suppresses long-term interest rates, weakening the dollar while boosting stock prices on hopes investing and hiring will follow suit.

"Participants generally agreed that starting to consider the options for normalization at this meeting was prudent, as it would help the Committee to make decisions about approaches to policy normalization and to communicate its plans to the public well before the first steps in normalizing policy become appropriate," the minutes from the Fed's April 29-30 meeting read.

"Early communication, in turn, would enhance the clarity and credibility of monetary policy and help promote the achievement of the Committee's statutory objectives."

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.01% at 80.12.

On Thursday, the U.S. is to release its weekly report on initial jobless claims and private sector data on existing home sales.

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