Dollar steady in Asia after upbeat US manufacturing data

Tokyo: The dollar held steady in Asia on Tuesday after getting a lift from positive US and Chinese manufacturing data, while speculation about further easing measures by the European Central Bank (ECB) held back the euro. In Tokyo midday trading, the greenback fetched 102.37 yen, little changed from 102.36 yen in New York Monday afternoon but well above 102.02 yen in Tokyo earlier in the day.

The euro ticked up slightly to $1.3604 and 139.26 yen on Tuesday against $1.3595 and 139.19 yen in US trade. The European single currency has faced selling pressure lately due to expectations of an interest rate cut by the European Central Bank.

On Monday, the dollar rose as the Institute of Supply Management said its purchasing managers index of US manufacturing activity rose in May to 55.4 from 54.9 in April, rather than slowing to 53.2 as it first reported, saying it was due to a software error. A reading above 50 indicates growth. Upbeat Chinese manufacturing data have also boosted investors' appetite for risk, spurring more dollar-buying. Figures released by China over the weekend showed manufacturing activity strengthening to a five-month high in May, an optimistic sign amid slumping growth in the world's number two economy.

Eurozone inflation concerns were also in focus as consumer prices in Germany, Europe's biggest economy, slowed to its lowest rate in four years in May, at 0.9 percent, compared with 1.3 percent in April. The sharp fall added to pressure on the ECB, which holds a monetary policy meeting Thursday, to act to keep the 18-nation bloc from falling into deflation. ECB watchers predicted a cut in the central bank's key interest rates and possibly new measures to pump liquidity into the banking system. The "ECB remains the central focus of this week as Germany 'flash' inflation came in much lower than expected yesterday," Credit Agricole said, adding that "if anything, (it) reinforces the view that the central bank cannot afford to remain on the side line".

Bank of Japan Governor Haruhiko Kuroda repeated his view Tuesday that the BoJ would not hesitate to pull the trigger on more easing if necessary to boost the economy and achieve a target of stable 2.0 per cent inflation by next year.  "I don't think the measures are limited," he told parliament. Investors are also looking ahead to eurozone unemployment and US factory orders later in the day, as well as US non-farm payroll figures at the end of the week.