Dollar up v.s. Aussie on China PMI, Eurozone eyed

HONG KONG (MarketWatch) -- The dollar jumped against the Australian dollar on Thursday, after the preliminary reading of China's manufacturing data from HSBC disappointed investors and sent most Asian equities into dive, while the euro advanced ahead of upcoming Eurozone flash PMI reports.

Earlier in the day, the HSBC/Markit "flash" version of its monthly China's Purchasing Mangers' Index (PMI) fell to the lowest level in seven months -- to 48.3 in February.

The results dragged most Asian stocks into the red, as Hong Kong's Hang Seng Index (HK:HSI)   fell 1.2%, South Korea's KOSPI index (KR:SEU)   lost 0.6%, and China's Shanghai Composite (CN:SHCOMP)   dropped 0.2%.

The Australian dollar (AUDUSD)  took a big hit from the downbeat China data, falling to 89.64 U.S. cents from 90.04 U.S. cents late Wednesday. The currency is often sensitive to data from China, which is the biggest export market for Australia.

Reuters Enlarge Image A Chinese national flag flutters at a construction site for a new residence complex in Beijing.

Against the Japanese yen, the U.S. dollar (USDJPY) declined to ¥101.81 from ¥102.32 late Wednesday. Japan's trade deficit widened more than expected to ¥2.79 trillion ($27.2 billion) in January, compared to December's ¥1.30 trillion, data showed on Thursday. The Nikkei index (JP:NIK)   sank 2.2% to close at 14,449.18.

Meanwhile, the ICE dollar index (DXY)  , which tracks the U.S. unit against six other currencies, declined to 80.09 from 80.191 late Wednesday. The WSJ Dollar index (XX:BUXX)  , an alternate gauge of the greenback's strength against a broader basket of rival currencies, also dropped to 73.56 from 73.62.

Elsewhere, the euro (EURUSD)   strengthened versus the dollar, trading at $1.3743 from $1.3733 late Wednesday, as markets closely watch the euro-zone flash PMI data from Markit due later in the day. The index was forecast to rise to 54.2 in February, compared to 54.0 in January, according to a poll of economists by Fact Research.

"While the euro-zone economy has been recovering slowly, growth has been uneven," said Kathy Lien, Managing Director for New York-based BK Asset Management in a recent note, "if the Flash PMIs surprise to the downside, indicating a slowdown in euro-zone economic activity, we could easily see EUR/USD drop back below 1.37."

In other foreign exchange trading, the British pound (GBPUSD)  moved a little lower to $1.6675, compared to $1.6681 late Wednesday.

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