Forex - Aussie weaker after slew of Asia data, as RBA meet looms

Investing.com - The Australian dollar fell on Monday in Asia after a slew of data from around the region since the weekend that pointed to ongoing efforts to kickstart growth, but also highlighted chances of a central bank rate cut.

AUD/USD fell 0.27% to 0.7787, with the Reserve Bank of Australia due to make its latest policy announcement on Tuesday. USD/JPY traded at 119.81, up 0.19%. Elsewhere, EUR/USD traded at 1.1174, down 0.19%.

The HSBC China final manufacturing index for February rose to 50.7 into the expansion zone and above the flash reading of 50.1.

On Saturday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.35%.

Also at the weekend, the February China Federation of Logistics and Purchasing (CFLP) manufacturing PMI improved for the first time in seven months, despite the Chinese New Year holiday, but remained just below the 50 mark, indicating that the sector contracted for a second straight month. The index rose to 49.9 in February from 49.8 in January.

On Monday, Australia's AI Group PMI fell 3.6 points to 45.4 in February, data released Monday showed. Also, the Melbourne Institute inflation gauge was flat in February, compared to a 0.1% expectation found in January. Business inventories in the fourth quarter in Australia fell 0.8%

In Japan, CAPEX data for non-financial firms rose 2.8% in the fourth quarter.

Last week, the dollar pushed higher against the yen and the euro on Friday after data showed that the U.S. economy expanded modestly in the last quarter of 2014, supporting expectations for interest rate increases.

The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 2.2% in the last three months of 2014, down from an initial estimate of 2.6% but ahead of expectations for a downward revision to 2.1% growth.

Other reports showed that U.S. pending home sales rose to a one-and-a-half year high in January and consumer sentiment also remained strong.

The February reading of the University of Michigan's consumer sentiment index was revised up to 95.4 from the preliminary reading of 93.6. While this was down from the previous months final reading of 98.1, it was still the second highest level since January 2007.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.17% to 95.45.

Last week, Federal Reserve Chair Janet Yellen said that if the economy keeps improving as the bank expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

In the week ahead, Friday’s U.S. employment report will be closely watched, while central banks in Australia, Canada, the U.K. and the euro zone are all to hold monetary policy meetings.

On Monday, the U.K. is to publish private sector data on house price inflation, as well as what will be a closely watched report on manufacturing activity.

The euro zone is to produce preliminary data on consumer prices and a report on unemployment.

In the U.S., the Institute of Supply Management is to report on manufacturing activity.