* Aussie slips as HSBC's China flash PMI hits 11-mth low
* Dollar index firmer, pulls up from 1-month low
* Market positioning may hold back the dollar - trader
By Masayuki Kitano
SINGAPORE, July 24 The dollar edged higher
versus a basket of currencies and the Australian dollar slipped
on Wednesday, as fresh signs of a slowdown in China's
manufacturing sector dampened appetites for risk.
The Australian dollar had set a one-month high earlier in
the session as key measures of underlying inflation in Australia
were taken as reducing chances for an interest rate cut next
month. Still, the data was mixed and views remained split on the
likelihood of a rate trim.
The Aussie, however, declined after the flash HSBC/Markit
Purchasing Managers' Index for China came in at an 11-month low
in July, while the U.S. dollar pushed broadly higher.
"Risk appetite is likely to be muted and the dollar should
benefit as a result," said Roy Teo, FX strategist for ABN AMRO
Bank, referring to the weakness in the gauge of Chinese
The dollar index, which measures the greenback's value
against a basket of currencies, rose 0.3 percent to 82.203
, pulling away from a one-month low of 81.926 set on
The Australian dollar slipped 0.4 percent to $0.9254
, down from an intraday high of $0.9320, the Australian
dollar's strongest level since late June.
The Aussie dollar is sensitive to economic data out of
China, which is Australia's biggest export market.
The U.S. dollar took a breather from a recent bout of
weakness. The euro fell 0.2 percent to $1.3193, down from
a one-month high of $1.3239 that was touched on Tuesday.
The dollar rose 0.5 percent against the yen to 99.94 yen
Still, some market players were cautious on the near-term
outlook for the greenback, which has declined after Federal
Reserve Chairman Ben Bernanke recently stressed the Fed will
keep rates low for a long time to come, even if it started to
scale back its asset purchases.
Recent price action in the euro versus the dollar, for
example, suggests that some market players are still long the
dollar and such positioning could temper any gains for the
greenback, said Hiroshi Maeba, head of FX trading Japan for UBS
Data from the U.S. Commodity Futures Trading Commission
shows that in the week ended July 16, currency speculators
boosted their bets in favour of the U.S. dollar to the highest
in six weeks.