* HSBC China PMI rises to 50.8 in June from 49.4 in May
* Canadian dollar extends gains after inflation shock
* Euro capped after dovish comments from ECB
By Hideyuki Sano and Ian Chua
TOKYO/SYDNEY, June 23 The Australian dollar
jumped to test its year-to-date peak on Monday after a Chinese
manufacturing survey showed surprisingly big improvements.
The Canadian dollar also hit a five-month high, building on
to its 0.6 percent gain against the greenback on Friday as
surprisingly high Canadian inflation data and robust retail
sales figures challenged the central bank's accommodative policy
The Aussie rose to as high as $0.9444, near its
April 10 peak of $0.9461. A climb above that would take the
currency to its highest level since November. It last stood at
$0.9438, up 0.6 percent.
Sparking the Aussie's jump was a preliminary HSBC survey
showed activity in China's factory sector expanded in June for
the first time in six months as new orders surged.
"The flash PMI for June showed that the economy has turned
the corner. Both domestic and external demand kept expanding,"
HSBC analysts wrote in the PMI report.
The upbeat report on China came as a relief for investors
fretting about the health of Australia's biggest export market
and a recent slide in iron ore prices.
Another outstanding performer was the Canadian dollar, which
rose about 0.3 percent in Asia to hit a 5 1/2-month high around
C$1.0725 per U.S. dollar.
The Canadian unit gained on Friday after the country's
annual inflation rate hit a 27-month high of 2.3 percent in May.
This was above the central bank's target and raised doubts on
the Bank of Canada's accommodative policy stance.
Other major currencies moved little, with the euro
undermined by dovish comments from the European Central Bank at
ECB President Mario Draghi said interest rates would stay
low over a longer period and that large-scale asset purchases
were still part of the central bank's toolkit.
The common currency briefly slipped to $1.3587 before
steadying around $1.3600, the same level as late New York on
As a result, the dollar index was flat at 80.282,
steadying after last week's 0.3 percent fall, its biggest
decline in over a month.
Against the yen, the dollar was little changed at 101.99 yen
The British pound was firmer, trading at $1.7018,
up 0.1 percent from last week, on expectations the Bank of
England could raise interest rates before the end of this year.
The pound held near a 5-1/2 year high of $1.7064 hit on
One of the Bank of England's most dovish policymakers, David
Miles, tried to play down those expectations. In an article
published on Sunday, Miles said subdued inflation in Britain
would enable policymakers to raise interest rates gradually.
Still, many speculators are pouring funds into sterling,
desperately seeking a trend as the euro and the yen comfortably
sit in narrow ranges.
Data from a U.S. financial watchdog showed speculators' long
position in the pound futures hit the highest level since late
2007 last week.
Currency markets have yet to show any reaction to the
violence in Iraq, although oil prices have risen on concerns
over possible supply disruption.
On Sunday, militants overran a second frontier post on the
Syrian border, extending two weeks of swift territorial gains as
the Islamic State of Iraq and the Levant (ISIL) pursues the goal
of its own power base, a "caliphate" straddling both countries
that has raised alarm across the Middle East and in the West.
(Editing by Richard Pullin and Richard Borsuk)