* Dollar index at one-month lows after extending decline
* HSBC's China manufacturing report next in focus
* Aussie dollar eyes consumer inflation figures at home
By Ian Chua
SYDNEY, July 24 The dollar wallowed at one-month
lows early in Asia on Wednesday after extending a broad decline
for a third session, giving beaten-down currencies such as the
Australian dollar some breathing space.
But trading is likely to be cautious as investors wait for
the latest reading on China's manufacturing activity due at 0145
GMT. Further signs of a slowdown in the world's second-biggest
economy will be curb appetite for risk and could support the
The dollar index traded at 82.014, following a 0.3
percent fall on Tuesday. It has slid about 3 percent from a high
of 84.753 early this month and retraced more than 61.8 percent
of its June 19 to July 9 rally.
The greenback's decline came as U.S. Treasury yields
retreated from two-year highs after Federal Reserve Chairman Ben
Bernanke recently stressed the bank will keep rates low for a
long time to come, even if it started to scale back its asset
Pressure on the dollar saw the euro climb as far as $1.3239
, highs not seen since June 21. Against the Japanese
currency, the dollar languished below 100 yen, while the
euro stayed near Monday's two-month peak around 132.47 yen
"The USD's on-going slide reflects the combination of
stretched long dollar positioning and a move in rate
differentials against the U.S. currency," analysts at BNP
Paribas wrote in a note.
But its longer-term uptrend remained intact, particularly
against currencies such as the euro and sterling whose economies
are still mired in recession, they added.
"USD bulls may need to be patient pending a resumption of
divergent central bank news and data flows."
The softer greenback also gave the downtrodden Australian
dollar a much needed reprieve, allowing it to drift back up to
93 U.S. cents from a 34-month trough of $0.8998 plumbed on July
The immediate focus for Aussie dollar is consumer inflation
data due at 0130 GMT. Another benign reading will shore up
expectations for a cut in interest rates next month, and push
the Aussie down again.
Conversely an unexpected acceleration in inflation could
shock markets into paring back rate cut views, lifting the
Aussie. Debt markets have priced in about a two-in-three chance
of a move at the Aug 6 policy meeting.