Weak China PMI Sinks Euro, Australian Dollar

By ALEXANDER MARTIN

TOKYO—The euro hit a fresh 23-month low against the dollar during Asian trading Friday as weaker-than-expected Chinese data dampened the tone of an already bearish market amid fears about an escalating euro-zone debt crisis.
Commodity currencies such as the Australian dollar also took a hit as China's May purchasing managers index fell to 50.4, down sharply from 53.3 in April and below market expectations for a reading of 51.5.
"It's now quite clear that China's economy is slowing," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
But with the closely watched U.S. nonfarm payrolls for May to be released later in the day, the market may be cautious about placing any big bets, he said. A Dow Jones survey of economists expects the U.S. economy to have added 155,000 jobs in the month, compared with 115,000 added in the previous month.
"If the figures are weaker than expected, and if the U.S. ISM manufacturing PMI out later is also lower, we could see the globally bearish tone continuing," he said.
A struggling U.S. labor market could increase the chances of the Federal Reserve undertaking more bond-buying, which would likely weaken the greenback.
The euro hit a fresh 23-month low of $1.2324 following the release of the Chinese data, while the Australian dollar fell to US$0.9649, its lowest since last October.
Meanwhile Japanese authorities stepped up their pressure on the yen's recent strength, with the country's finance minister strongly suggesting that he may order intervention if the currency's "excessive" and "speculation-driven" moves continue.
"If these excessive moves continue, I will have to respond decisively," Finance Minister Jun Azumi said, using language that suggested the possibility of intervention has sharply increased. "I'm saying I will take decisive measures and I mean it," he said.
But with Greece's re-election coming up on June 17, authorities may have difficulty making decisive moves on currency policy as its outcome could alter market sentiment drastically, said Masafumi Yamamoto, chief forex strategist at Barclays in Tokyo.
As of 0250 GMT, the euro was at $1.2350 from $1.2366 late New York trading Thursday, according to trading platform EBS. The common currency was at ¥96.89 from ¥96.81, while the dollar was at ¥78.44 from ¥78.30. The Australian dollar was at US$0.9690 from US$0.9732.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 83.163 from 83.056.
end quote from:
http://online.wsj.com/article/SB10001424052702303640104577439332710051816.html

So, Greece is having problems as well as Spain, the U.S. looks better but not that much and China's economy is slowing. What's next?

Intuitive fred888

Thursday, May 31, 2012