Aussie dollar gains despite China's weak manufacturing data, yen trades lower

On Monday the Australian dollar continued its gains despite disappointing manufacturing data from China.

In China, the HSBC January manufacturing PMI us came in at 49.7, lower than the flash estimate of 49.8.

AUD/USD traded at 0.7782, up 0.21%, while EUR/USD traded at 1.1322, up 0.31%.

The U.S. Dollar was higher versus the Japanese Yen on Monday. USD/JPY was trading at 117.64, up 0.12% at time of writing. The pair was likely to find support at 116.98, Monday’s low, and resistance at 118.51, Thursday’s high.

The Australia AI Group manufacturing PMI fr January rose 2.1 points to 49, still in contraction, but a tick up amid expectations that the central bank may mull a rate cut from the currency record low 2.5%.

This weekend China announced January CFLP manufacturing PMI fell to 49.8 from 50.1 in December, placing it in contraction even as the timing of the Chinese New Year holiday this year relative to last should have boosted the January reading.

Last week, the U.S. dollar was mostly lower against its major counterparts on Friday, as investors reacted to data showing the U.S. economy grew less than expected in the fourth quarter.

The Commerce Department said in a report that the economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.

At the same time, the euro was under pressure after data showed that deflation in the single currency bloc deepened in January and amid growing concerns over Greece's future in the euro zone.

Greece’s new government said it will not cooperate with the International Monetary Fund and the European Union and will not seek an extension to its bailout program, underlining fears over a clash with its international creditors.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.

Today, in the euro zone, Spain is to release data on the change in the number of people employed.

The U.K. is to publish its manufacturing index.

In the U.S., the Institute of Supply Management is to release data on manufacturing activity. The country will also produce a report on personal income and spending.