ASIA session review: Dollar ticks higher, data in focus

Data released: 

01:45 GMT China HSBC Manufacturing PMI (Aug) 50.1 50.2 47.7 

07:30 GMT Switzerland SVME - Purchasing Managers' Index (Aug) 54.6 55.9 57.4 

07:48 GMT France Markit Manufacturing PMI (Aug) 49.7 49.7 49.7 

07:53 GMT Germany Markit Manufacturing PMI (Aug) 51.8 52.0 50.7 

07:58 GMT EMU Markit Manufacturing PMI (Aug) 51.4 51.3 50.3 

08:28 GMT UK Markit Manufacturing PMI (Aug) 57.2 55.0 54.8 

The U.S. dollar nudged higher early Monday ahead of a rush of data and central-bank policy decisions due for the week ahead. 

Looking ahead, this Friday's nonfarm payrolls report should be the highlight of the week since the state of the jobs market is key to Federal Reserve policy. A strong number should affirm expectations that the Fed will pull back on its monetary stimulas when it meets later in the month. 

Later in the week, the European Central Bank, Bank of England, Bank of Japan and Reserve Bank of Australia were all slated to issue monetary-policy decisions, though reports said none of the four were likely to make any interest-rate moves. 

EURO 

Data released showed Eurozone PMI Manufacturing grew to 51.4 points in August, from 50.3 points in July, almost in line with forecasts of 51.3. 

Separate report showed German PMI Manufacturing grew to 51.8 points in August, from 50.7 points in July. Analysts expected an increase to 52. 

EUR/USD corrects after reaching lows at $1.3170. Initial resistance comes at $1.3250 (hourly highs) and $1.3400 (Aug 23 highs). Further resistance is near $1.3450 (Aug 20 high) and $1.3520 (Feb 13 high). Below $1.3170 rate may test $1.3060 (Jul 18 lows). 

POUND 

The pound rose Monday after the UK PMI Manufacturing surprised to the upside in August rising to 57.2 points in August, from 54.8 points in July. Analysts expected less growth to 55. 

GBP/USD printed session high on $1.5590 and retreated a bit. Above resistance comes at $1.5610/40 (Aug 26 and 23 highs respectively) and $1.5715 (Aug 21 highs). Initial support is near $1.5500 (earlier broken resistance line from Aug 21), but the key support remains near Friday’s lows at $1.5460, extending to $1.5430 (Aug 28 lows). 

YEN 

The yen fell after speculators added to bearish bets on the currency and on signs Japan’s prime minister is making progress on policies that have helped weaken the currency. 

“I expect a sales-tax hike to sustain optimism toward Abenomics, resulting in a weaker yen,” said Kengo Suzuki, the chief currency strategist in Tokyo at Mizuho Securities Co. “For Japan’s monetary, fiscal and growth policies to be properly executed, a higher levy is needed, and an increase in the sales tax can be seen as the key to these three arrows of Abenomics.” 

Prime Minister Abe is trying to sustain an economic recovery driven by fiscal and monetary stimulus as he moves on to tackling changes such as deregulation needed for a longer-term revival in Japan. 

Abe said today he’ll make a decision on the tax this autumn. 

Japanese companies’ capital spending was unchanged in the second quarter from a year earlier, a Ministry of Finance report showed today. The median forecast was for a 2.1% decline. 

The Bank of Japan will start a two-day meeting on Sept. 4. 

USD/JPY challenged Y99.00/10 and remains higher after it broke key resistance around Y98.70 (channel line from Jul 8). Currently resistance comes at Y99.10 (Aug 23 high) and then - at Y99.90/Y100.00 (Aug 2 high and phycologycal level). Back below Y98.70 may drag the rate down to Y98.00/Y97.90 (Aug 30 lows) and Y97.40 (Aug 29 lows). 

COMMODITY CURRENCIES 

AUSSIE: The Australian dollar rose ahead of an expected decision on Tuesday by Australia’s central bank rate to hold the benchmark interest rate at 2.5%. 

The Aussie was lifter on Monday after the official Chinese data released over the weekend showed the manufacturing Purchasing Managers’ Index for August rose to 51.0 from 50.3 in July. The final reading of a separately conducted survey by HSBC and Markit, released Monday, also put the August PMI reading at 50.1, rebounding strongly from an 11-month low of 47.7 in July. 

DATA AHEAD: 

U.S. financial markets will be closed on Monday in observance of the U.S. Labor Day holiday.

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