Dollar Steady In Early Asia Ahead OF Caixin Manufacturing PMI
The dollar drifted was flat against the yen in early Asia on Tuesday as markets returned from a long holiday weekend across most of the region, but with Tokyo closed.
USD/JPY changed hands at 112.67, while AUD/USD traded at 0.7805, also flat ahead of a closely-watched survey from China.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.38% at 91.99.
In Asia, the Caixin China manufacturing PMI for December is due with a reading of 50.6 seen. The official China PMI was released on Sunday and dipped to 51.6 in December, down from 51.8 in November but in line with forecasts from economists in a Reuters poll. But the overall reading still appeared relatively solid, and marked the 18th straight month that the sector has expanded. The 50-point level divides growth from contraction on a monthly basis.
The China services PMI rose to 55.0 in December, compared with 54.8 in November
Markets in New Zealand and Japan are shut for holidays.
Market watchers will also focus on Wednesday’s minutes of the Federal Reserve’s December policy meeting for further hints on the future path of monetary policy.
Last week, the dollar fell to its lowest levels in more than three months against a basket of the other major currencies on the final market day of 2017 on Friday and posted its largest annual percentage decline since 2003.
The dollar also lagged despite the Federal Reserve’s rate increases amid increased investor expectations for other central banks to reduce their stimulus.
The euro climbed against the greenback, with EUR/USD rising above the 1.20 level to a high of 1.2025 late Friday. The euro gained 14% against the dollar in 2017 as faster-than-expected euro zone growth fueled expectations that the European Central Bank will tighten monetary policy sooner and faster than anticipated.
Higher interest rates tend to make a currency more attractive to yield-seeking investors.
The ECB is expected to reduce its monthly bond purchases to €30 billion in January from €60 billion, having scaled back purchases from €80 billion last April.