FOREX-Yen slips, Aussie jumps as China data cheers

Sun Apr 1, 2012 7:10pm EDT

* China March PMI jumps to 11-month high

* Commodity currencies shine as Chinese hard landing fears ease

* Yen can resume downtrend as fiscal year-end flows fade

By Ian Chua

SYDNEY, April 2 (Reuters) - The safe-haven yen eased on Monday, while commodity currencies like the Australian dollar jumped after surprisingly strong Chinese factory activity data eased fears about a hard landing in the world's second biggest economy.

The Australian dollar soared nearly a full U.S. cent to $1.0441, having peaked at $1.0470, after a report on Sunday showed activity in big Chinese factories hit an 11-month high in March.

"This is now three months of trend improvement, and is good news for the AUD and commodity currencies in general," said Annette Beacher, head of Asia Pacific research at TDSecurities.

For now, traders expect the Aussie to consolidate in the $1.0410/70 range before another attempt on the upside. Against the yen, the Aussie climbed to 86.50, pulling well away from last week's trough around 84.60.

The Chinese data came hot on the heels of more upbeat U.S. data showing a big increase in consumer spending in February. The U.S. data led some leading economists to raise their forecasts for first quarter growth.

All of this should shore up risk appetite in Asia, a positive for regional bourses and risk currencies, traders said.

Not surprisingly, the dollar and yen, usually bought in times of heightened market stress, got the week off to a soggy start, with the euro outperforming.

The yen could also resume its downtrend as support from Japan's fiscal year-end flows have all but fizzled. The low-yielding Japanese currency is still seen as a funding currency for carry trades.

Data last Friday showed currency speculators boosted bets against the yen to the highest since July 2007 in the week ended March 27.

The euro rose to $1.3369, from $1.3336 late in New York on Friday. Against the yen, the single currency flirted with 111.00, up from 110.41.

The dollar held firm against the yen, having benefited on Friday from higher Treasury yields in the wake of the upbeat spending data. It stood at 82.83 versus 82.78 in New York.

Markets will get the latest reading of factory activity data in the rest of the world later in the day including French, German, euro zone manufacturing PMI data in Europe the ISM manufacturing PMI in the United States.

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