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The
euro was also hit by expectations the European Central Bank will
expand quantitative easing after a subdued eurozone inflation
report. The Bank of Japan's tankan corporate sentiment survey
sent mixed signals, weighing on the yen.
The euro was down 0.3 percent at $1.1145 <EUR=>, while the
dollar was buying 120.15 yen <JPY=>, up about 0.3 percent from
late U.S. trading.
Both currencies performed well last quarter, after investors cut
risky carry trades funded in both currencies when China devalued
its currency and triggered worries about global growth, dragging
down stocks and commodities.
Data from China on Thursday showed the world's second- largest
economy was still on shaky ground but doing better than some had
forecast. European stock markets were more than 1 percent
higher, following on from Asian markets. [MKTS/GLOB]
The final Caixin/Markit China Manufacturing Purchasing Managers'
Index (PMI) slipped to 47.2 in September, up from a preliminary
reading of 47.0 but still its lowest since March 2009 and a
deterioration from August's 47.3.
China's official PMI, released separately, inched up to 49.8 in
September from the previous month's reading of 49.7, though it
still showed contraction for the second month.
"The Chinese data was just slightly better and this is lending
some confidence to investors," said Neil Mellor, currency
strategist at Bank of New York Mellon. "Having said that,
euro/dollar is still stuck within familiar ranges."
Markets focused on the China surveys after the Federal Reserve
left interest rates unchanged last month, citing worries about
the global economy, particularly China.
"The big picture is still that the outlook for the global
economy remains very subdued, mainly due to weak Chinese
growth," said Masashi Murata, currency strategist for Brown
Brothers Harriman in Tokyo.
The BOJ's tankan survey showed confidence at big Japanese
manufacturers worsened, leading some to bet that the central
bank could take further stimulus steps. But service-sector
sentiment improved for the fourth straight quarter, reaching its
highest level in more than two decades.
Investors still expect the monetary policies of the BoJ and the
ECB will diverge from that of the Federal Reserve as U.S.
employment improves. In the medium term, that should help the
dollar.
Economists expect Friday's U.S. nonfarm payrolls report to show
that employers added 203,000 jobs in September, according to a
Reuters poll.
(Additional reporting by Lisa Twaronite, editing by Larry King)
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