Investing.com - The Australian dollar fell further in Asia on Monday with a mixed manufacturing read out of China as well as an unexpected dip in services dimming sentiment.
AUD/USD traded at 0.7065, down 0.32%, while USD/JPY changed hands at 121.24, up 0.09%.
In China the semi-official manufacturing PMI for January reached 49.4, missing the 49.6 level seen and remaining in contraction and the Caixin Manufacturing PMI index came in at 48.4, a bit above the expected 48.0. As well, Japan reports its manufacturing PMI, with a 52.4 level seen. The non-manufacturing PMI in China hit 53.5, down from 54.4 the previous month.
Figures above 50 suggest expansion and those below contraction.
"The upshot is that economic momentum may have deteriorated last month. That said, we can’t be certain yet," Capital Economics said in a note to clients after the data. "The PMIs provide and early hint of how the economy is performing but we don’t recommend putting too much weight on them. The official manufacturing PMI, in particular, appears to have been a poor gauge of economic activity over the past year."
Earlier, the AIG Manufacturing index in Australia for January came in at 51.5 with last month's reading at 51.9. As well, the MI Inflation Gauge rose 0.4%, compared to 0.2% in the latest month-on-month estimate.
In the week ahead, investors will be awaiting a flurry of survey data on manufacturing and service sector growth amid concerns over the outlook for the global economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.07% to 99.52.
Investors will also be awaiting Friday’s U.S. jobs report for January for fresh indications of the strength of the labor market.
Central bank meetings in the U.K. and Australia will also be in focus.
Last week, the dollar rose against the other major currencies on Friday after an unexpected decision by the Bank of Japan to adopt negative interest rates and U.S. gross domestic product data which broadly matched economists’ expectations.
The dollar rallied against the yen after the BoJ’s shock decision to cut its deposit rate into negative territory as part of an ongoing effort to combat deflation.
The shift to negative interest rates is designed to encourage commercial lenders to use excess reserves they keep with the central bank to lend to businesses.
The BoJ also said it had not ruled out deeper cuts, warning that it would cut the interest rates further into negative territory if necessary.
The move highlighted the diverging monetary policy path between the Federal Reserve and other world central banks.
The Fed raised interest rates for the first time in almost a decade in December and has indicated that it intends to tighten monetary policy further this year, while the BoJ has joined the European Central Bank in cutting rates below zero. Higher interest rates make the dollar more attractive to yield seeking investors.
The dollar received an additional boost after data on Friday showed that the U.S. economy grew at an annual rate of 0.7% in the fourth quarter, compared to forecasts for growth of 0.8% after 2% growth in the third quarter. The U.S. economy grew 2.4% in 2015 the Commerce Department said, matching similar growth in 2014.