Reuters: US Dollar Report: FOREX-Yen off highs, China HSBC PMI eyed

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FOREX-Yen off highs, China HSBC PMI eyed May 1st 2012, 23:23 Tue May 1, 2012 7:23pm EDT * USD bounces from 2-1/2-month lows vs yen * Euro off one-month peak against USD * China HSBC PMI final due at 0230 GMT * Aussie nursing deep losses post RBA cut By Cecile Lefort SYDNEY, May 2 (Reuters) - The dollar held gains on the yen Wednesday having bounced from 2-1/2-month lows after upbeat U.S. manufacturing data soothed fears the economy was slowing, while Asia waited for the latest update on Chinese industry. The ISM report showed the strongest rate of growth in 10 months, countering recent speculation the Federal Reserve will embark on a third round of bond buying to bolster the economy. The dollar rebounded above 80.00 yen and last stood at 80.110. Its recovery from a trough of 79.640 yen caught speculators short and forced them to buy back the dollar. Immediate resistance was found at Monday's high of 80.39, ahead of 80.45/50, the 38.2 percent retracement of the 81.78/79.64 move. Support is seen at 79.60 yen, the 100-day moving average. The euro retreated to $1.32365, having briefly touched a one-month peak of $1.3284 overnight. The single currency has been stuck around $1.3235/45 for four trading days with dealers citing talk of central banks on both sides of the market to hem in price action. Key data in Asia will be China's HSBC final PMI reading for April at 0230 GMT. Expectations are for a number close to the flash PMI last week at 49.1, when it showed factories posted their best performance this year. A weaker reading could spark risk aversion with the Australian and New Zealand dollar particularly sensitive to any news out of China, a key export market. On Tuesday, China released its official PMI showing manufacturing output rose to its highest in a year in a sign the economy could be recovering from a first-quarter trough. China's official PMI focuses on large-scale manufacturing, while HSBC centers on smaller businesses. Light trading is expected before Thursday's European Central Bank meeting, Friday's U.S. non-farm payrolls report and weekend elections in Greece and France. The U.S. index was slightly up at 78.822, off a two-month trough of 78.603, while the Australian dollar was nursing heavy losses after the Reserve Bank of Australia's surprisingly large 50 basis-point rate cut. It last traded at $1.0334 after suffering a near 1-percent fall on Tuesday, the biggest one-day decline in six weeks. Link this Share this Digg this Email Reprints

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