* Dollar down vs euro and yen, reflecting dip in U.S.
* Aussie falls on lower-than-expected CPI data
* Limited reaction to China HSBC flash manufacturing PMI
(Recasts with U.S. market, new byline and dateline)
By Daniel Bases
NEW YORK, April 23 The U.S. dollar weakened
against the euro and yen on Wednesday, undermined by a decline
in U.S. equity prices and Treasury yields and finding little
support from a slower-than-expected expansion in the U.S.
"As (U.S.) equities underperform, this leads to buying of
Treasuries and yields fall. The dollar is softer as a result
because it is reflecting other markets rather than internal
components," said Sebastian Galy, senior currency strategist at
Societe Generale in New York.
A smaller-than-expected increase in Australian first-quarter
consumer inflation spurred Aussie dollar losses of more than 1
percent versus the greenback as the data diminished chances the
Reserve Bank of Australia will raise interest rates this year.
The Australian dollar extended its losses in early
U.S. trade, touching a low of $0.9268 and pulling further away
from a five-month high of $0.9461 set earlier in April.
Australia's growth prospects, at the heart of the central
bank's efforts to talk the currency down last year, have
improved, while concerns over China have settled somewhat. That
was underscored by a weak China PMI survey on Wednesday that was
in line with forecasts.
The U.S. dollar's value against a basket of currencies
fell 0.11 percent, touching a weekly low.
U.S. manufacturing activity expanded in April, but the rate
of growth was slower than expected as inventories fell. Sales of
U.S. single-family homes in March were the lowest since July of
last year, falling more than expected.
In Europe, April manufacturing activity increased more than
expected to a near three-year high. The euro however remains
hamstrung by consistently low inflation and investors are wary
of the possibility of more monetary stimulus from the European
The euro rose 0.23 percent to $1.3835, and climbed
0.48 percent to 82.41 pence against the British pound.
Sterling fell 0.22 percent to $1.6783.
Sterling fell after Bank of England meeting minutes
highlighted a growing debate between policymakers about slack in
the economy and the medium-term inflation outlook.
The dollar fell 0.26 percent to 102.32 yen, while the
euro slipped 0.04 percent to 141.52 yen.
"We think the ECB believe that the current low inflation is
temporary and that it will pick up along with growth," said
Kenneth Dickson, investment director with Standard Life
Investments in Edinburgh. "They do not believe that Europe is
heading for the sort of deflationary cycle that Japan saw."
Still, ECB policymakers are talking about the dangers of any
further gains for the euro. Its president, Mario Draghi, has
made clear the euro's strength is a possible trigger for the
bank to ease monetary policy. He is scheduled to give a speech
in Amsterdam on Thursday.
(Additional reporting by Patrick Graham in London, Masayuki
Kitano in Singapore, Ian Chua in Sydney; Editing by Larry King
and Meredith Mazzilli)