* CAD, AUD, NZD outperform G3 peers after upbeat China PMI
* USD, EUR and JPY still searching for inspiration
* Japan to announce more 'Third Arrow' policies
By Ian Chua
SYDNEY, June 24 The dollar-bloc currencies held
onto gains early on Tuesday, having outperformed their G3 peers
on optimism about Chinese growth and as the market prepared for
Japan to deliver its latest instalment of long-term economic
The Canadian dollar traded at C$1.0727, not far
from a 5-1/2 month peak of C$1.0717 per U.S. dollar. Both the
Australian and New Zealand dollars were at $0.9425 and
$0.8714, having hit multi-week highs of $0.9445 and
$0.8749 on Monday.
All three currencies had risen after a closely watched
survey on Monday showed activity in China's factory sector
expanded in June for the first time in six months as new orders
Gains in the Canadian dollar followed Friday's rally sparked
by upside surprises in local inflation and retail sales data.
"Our proprietary positioning indicator is suggesting market
has flipped to a long CAD bias for the first time since early
2013," BNP Paribas analysts wrote in a note to clients.
"Given the scope for a less dovish Bank of Canada
announcement and Monetary Policy Report next month, we see scope
for further CAD gains, particularly against EUR and AUD."
In contrast, the G3 currencies were stuck in familiar ranges
with investors discounting the latest readings on euro zone,
U.S. and Japanese manufacturing activity given the dovish stance
taken by all three major central banks.
The euro was last at $1.3602, having traded on either
side of $1.3600 in the past few sessions. Against the yen, the
common currency stood at 138.60, while the dollar
That left the dollar index little changed at 80.270,
well within 80.000-81.000 seen since May.
Japanese Prime Minister Shinzo Abe will on Tuesday detail
his so-called "Third Arrow" policies including phased corporate
tax cuts, public pension reforms and proposed dance hall
Given that many have already been leaked or announced by
officials, the risk is that the measures are likely to receive a
lukewarm response from investors. Still, the market will be keen
to see how they are fleshed out and implemented.
There are no major economic data scheduled for release in
Asia on Tuesday, leaving the focus squarely on Abe's
(Editing by Shri Navaratnam)