Forex Aussie dollar slides after weak China PMI, yen firms

by **Cals** Wed 23 Sep 2015, 20:46

Forex

[size=28]Aussie dollar slides after weak China PMI, yen firms

By Reuters / Reuters | September 23, 2015 : 11:57 AM MYT

SINGAPORE (Sept 23): The Australian dollar tumbled and the yen rose on Wednesday after a survey showed Chinese factory activity fell to a 6-1/2-year low, clouding the outlook for global growth.

The preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) fell to 47.0 in September, the worst since March 2009 and below market expectations of 47.5.

The bleak reading of Chinese manufacturing activity reinforced concerns of a sharper-than-expected slowdown in the world's second-largest economy and spurred selling of commodity currencies, while giving a boost to the safe haven yen.

The Australian dollar, which is seen as a liquid proxy for China plays, fell 0.9% to US$0.7026, pulling further away from a near four-week high of US$0.7280 set on Friday.

Against the yen, the Aussie shed 1.2% to 84.14.

The yen also gained ground against the U.S. dollar, with the greenback slipping 0.3% to 119.79 yen.

Against a basket of six major currencies, the dollar pulled back to 96.263. Earlier on Wednesday, the dollar index had set a high of 96.484, its strongest level since Sept 4.

The latest sign of slowing Chinese growth could increase the uncertainty over the possible timing of a U.S. Federal Reserve rate rise, analysts said, after the Fed held off from raising interest rates last week.

"Clearly, the Fed is placing greater importance on China and Chinese activity, so this could be seen as a further reason to delay Fed rate hikes," said Mitul Kotecha, head of FX strategy Asia-Pacific for Barclays in Singapore.

The euro rose 0.2% to US$1.1137, pulling up from a low of US$1.1105 set earlier on Wednesday, its lowest level since Sept 4.

The euro is still down about 1.4% for the week, after recent comments from European Central Bank officials bolstered the view that the ECB could expand monetary stimulus.
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