Dollar Flat Ahead of FOMC, Australian Dollar Down on China Data

 
   By Hiroyuki Kachi 
 

        The dollar was almost flat against the yen and the euro in Asian trade Friday, with investors avoiding taking strong positions ahead of big events including the Federal Open Market Committee meeting and U.S. gross domestic product data next week.
        Meanwhile, the Australian dollar was sold with disappointing China manufacturing index denting the commodity-linked currency.
        Around 0450 GMT, the dollar was at Y123.88, compared with Y123.92 late Thursday in New York. The U.S. currency was slightly higher against the euro, which fell to $1.0973 midday, compared with $1.0983 overnight.
        The greenback remained steady against the yen earlier in the session in a sign of demand for the dollar buying from corporate and institutional on the day of regular commercial trade settlement, especially after feeling the heat from big M&A news in the morning.
        Japanese life insurer Meiji Yasuda Life Insurance Co. said it has agreed to buy StanCorp Financial Group for $5 billion in the latest example of outbound acquisitions by Japanese firms.
        But the U.S. currency found itself top-heavy for the rest of the session with the Nikkei Stock Average extending its losses on a weaker than expected China manufacturing index later in the morning.
        The preliminary Caixin China Manufacturing Purchasing Managers' Index, a gauge of nationwide manufacturing activity, fell to a 15-month low of 48.2 in July, compared with a final reading of 49.4 in June, Caixin Media Co. and research firm Markit said Friday. A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction. The reading suggests the world's second-largest economy is struggling to stabilize and arrest a broad slowdown.
        "Only the U.S. and the U.K. stand out in terms of economic performance," in otherwise mixed picture elsewhere in the world, said Marito Ueda, director at FX Prime byGMO.
        China remains a source of concerns but worries about emerging economies have surfaced on recent softening in commodity prices in a move that may exert a drag on the ongoing recovery in the U.S. and the U.K. "That's preventing investors from turning to a risk-on mood," said Mr. Ueda.
        The benchmark Nikkei was down 0.6% midday, compared with a 0.7% fall just after the China data. The Shanghai Composite was last trading up 1.1%.
        The Australian dollar was also a victim of the downbeat China data, with the currency diving to $0.7269, its lowest level since May 2009. The Aussie--already under pressure from falling oil, gold and other commodity prices--briefly hit Y90.09, its lowest since July 9.
        With the rest of the market languishing in the "summer doldrums" amid a lack of fresh trading cues, a currency showing signs of weakness can become a target of concentrated selling, said Mr. Ueda at FX Prime byGMO.
        Among other currency pairs, the euro was at Y135.89 from Y136.06.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.11% at 88.43.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        July 24, 2015 01:26 ET (05:26 GMT)

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