SYDNEY (Reuters) - The euro and commodity currencies got off to a steadier start on Thursday following a choppy session overnight that saw Wall Street end flat after a two-day closure due to Hurricane Sandy.
Trading was expected to remain subdued in early Asian dealings as investors wait for the latest reading on China's manufacturing data due around 2100 EDT.
Any confirmation that China's slowdown has stabilized could help lift risk sentiment, underpinning the euro and commodity currencies such as the Australian dollar in particular.
"Certainly the signs are there that China's economy may be stabilizing and that's positive. But a lot of that kind of thinking is already priced in. There are still question marks over the leadership transition in China," said Greg Gibbs, senior FX strategist at RBS in Singapore.
The euro bought $1.2960, little changed from its New York close, having again found the going tough above $1.3000. It remained well within a $1.2800/1.3200 range seen since early September.
The pullback in the euro from levels above $1.3000 saw the dollar index .DXY climb off a one-week low of 79.270 to 79.933.
Ongoing uncertainty about if and when Spain will seek a bailout and trigger the European Central Bank's bond-buying program and whether Greece will secure more emergency loans continued to dog the single currency.
Euro zone finance ministers made progress on Wednesday on ways to keep Greece afloat, but Athens still needs to push through spending cuts and tax measures worth 13.5 billion ($17.5 billion) as well as a raft of economic reforms to receive fresh bailout money.
Against the yen, the greenback fetched 79.82, having recovered from a fall to 79.26 on Tuesday when investors briefly unwound bearish yen positions after the Bank of Japan balked at taking bolder steps to stimulate the Japanese economy.
The Canadian dollar, meanwhile, stayed on the defensive after the Canadian economy unexpectedly contracted in August for the first time in six months. That helped the greenback rise back above parity.
"Despite the disappointment, we do not expect the monthly GDP report to have a significant impact on the BoC's current rhetoric that highlights a tightening bias to gradually removing policy accommodation over time," Bricklin Dwyer, analyst at BNP Paribas wrote in a client note. "We continue to expect the BoC to remain on hold until the middle of 2013."
The Aussie traded at $1.0371, taking a bit of breather after rising as high as $1.0400 on Wednesday, near the October peak of $1.0412. A break there would take it back to highs not seen since late September.
Following the Chinese data, all eyes will be on the influential U.S. non-farm payrolls report on Friday. The data is expected to show job growth picked up in October, but not enough to keep the unemployment rate from rising from a four-year low.
"Expect any significant surprises to force sharp moves in the U.S. currency as traders attempt to telegraph the U.S. Federal Reserve's next steps," said David Rodriguez, strategist at DailyFX.
Editing by Eric Meijer