Forex- Aussie weaker in early Asia with China HSBC PMI Feb final ahead

Investing.com - The Australian dollar eased on Monday in early Asia after data at the weekend showed China's official manufacturing index just in contraction.

On Saturday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.35%. Later Monday, China is to publish the final February reading of the HSBC manufacturing index, or PMI with 50.1 expected, placing it just in the expansion zone.

At the weekend, the February China Federation of Logistics and Purchasing (CFLP) manufacturing PMI improved for the first time in seven months, despite the Chinese New Year holiday, but remained just below the 50 mark, indicating that the sector contracted for a second straight month. The index rose to 49.9 in February from 49.8 in January.

Australia's AI Group PMI fell 3.6 points to 45.4 in February, data released Monday showed.

Also on Monday, Australia publishes the MI inflation gauge and HIA new home sales for January. In Japan comes the February PMI as well.

AUD/USD traded at 0.7806, down 0.02%, while USD/JPY changed hands at 119.68, up 0.08%.

Last week, the dollar pushed higher against the yen and the euro on Friday after data showed that the U.S. economy expanded modestly in the last quarter of 2014, supporting expectations for interest rate increases.

The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 2.2% in the last three months of 2014, down from an initial estimate of 2.6% but ahead of expectations for a downward revision to 2.1% growth.

Other reports showed that U.S. pending home sales rose to a one-and-a-half year high in January and consumer sentiment also remained strong.

The February reading of the University of Michigan's consumer sentiment index was revised up to 95.4 from the preliminary reading of 93.6. While this was down from the previous months final reading of 98.1, it was still the second highest level since January 2007.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the day almost unchanged at 95.29, not far from Thursday’s one-month highs of 95.43.

Last week, Federal Reserve Chair Janet Yellen said that if the economy keeps improving as the bank expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

In the week ahead, Friday’s U.S. employment report will be closely watched, while central banks in Australia, Canada, the U.K. and the euro zone are all to hold monetary policy meetings.

On Monday, the U.K. is to publish private sector data on house price inflation, as well as what will be a closely watched report on manufacturing activity.

The euro zone is to produce preliminary data on consumer prices and a report on unemployment.

In the U.S., the Institute of Supply Management is to report on manufacturing activity.