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The Australian dollar was the worst performer in the Asian session after dropping 1% against the US dollar on disappointing GDP data. AUDUSD fell to a three-month low to $0.9045 after the data that showed the Australian economy grew less-than-expected in the third quarter at 0.6% versus 0.8% forecast. The Aussie has been falling steadily since the October 23 high of $0.9756, triggered by comments from Reserve Bank of Australia Governor Glenn Stevens who said the value of the currency is too high. Meanwhile, the soft GDP data suggests further monetary easing was not completely ruled out, meaning a possibility of a rate cut from the current 2.5% benchmark rate. The US dollar managed to make a small recovery against the yen after a big slide yesterday. USD/JPY dropped to 101.97 yesterday as investors took the opportunity to rake in their recent profits when the dollar hit 103 yen, while being cautious ahead of key risk events. There will be a string of US data coming out – ADP jobs data later today, US GDP tomorrow and the all-important US non-farm payrolls data on Friday. The dollar ended the Asian session at 102.66 yen, with a gain of 0.17%. The euro moved away from a one-month high against the dollar as focus turns to the European Central Bank policy meeting tomorrow. EURUSD slid to end the Asian session at $1.3579. However against the yen, the euro gained slightly to 139.41 yen.

The Australian dollar was the main mover in Monday’s Asian session as a result of data from China, which is Australia’s main trading partner. Manufacturing PMI data from the world’s second largest economy showed that expansion in the manufacturing sector was steady at an 18-month high and eased concerns of a slowdown there which could affect the rest of the global economy. The official Manufacturing PMI data which was released on Sunday was as expected and the private report from HSBC today was above forecast, with both being in expansionary territory. Since China is a major trading partner for Australia, the news was positive for the Australian dollar. Also data that showed Australia’s building approvals were not as bad as expected helped lift the Aussie, up 0.5% in the Asian session against the USD to $0.9150. The main news to look forward to later today will be Euro zone PMI data. The euro gained 0.11% against the dollar in Asia to 1.3601, moving closer to a one-month high of 1.3620 hit on Friday. The euro rose 0.06% against the yen to 139.31. The dollar was steady at 102.41 yen, down 0.10% in the Asian session after hitting a 6-month high of 102.60 yen on Friday. The main driver for the USD will be Friday’s US nonfarm payrolls data. US jobs data are closely watched by the Federal Reserve, as the data will play a part in determining when it can begin tapering.

The dollar remains bullish against the yen, while the euro hit a new four-year high against the Japanese currency in today’s Asian session. Bank of Japan Governor Kuroda kept markets speculation that the yen will weaken over time as the BOJ continues with its aggressive monetary easing policy and asset purchase program which is aimed at fighting deflation in Japan. The euro climbed to a high of 137.97 yen in the early Asian session while the dollar pushed past Friday's high and climbed to 101.90 yen, the highest since May 29. The increasingly diverging monetary policies of the Federal Reserve and the Bank of Japan will help keep the dollar/yen’s upward momentum. Against the dollar, the euro hit a high of $1.3559 before declining slightly on profit taking to $1.3539. The euro has made a substantial recovery from last week’s tumble to $1.3398, caused by rumours of negative interest rates from the European Central Bank. These rumours have since been downplayed by ECB Chief Mario Draghi. The British pound remained above the key $1.62 level, with GBPUSD hitting an early session high of $1.6239. The Aussie slid lower to a new 2-1/2 low of $0.9120 as it remains under pressure by the threat of intervention from the Reserve Bank of Australia after comments from Governor Stevens last week who said he is “open-minded” about such a move as he believes the AUD is overvalued compared with fundamentals.

The yen dropped to its weakest level in four months versus the broadly stronger US dollar in today’s Asian session. USDJPY hit a session high of 100.80 yen and ended the session with a 0.6% gain at 100.70 yen. The diverging monetary policies between the Bank of Japan and the Fed are causing a wider gap between US bond yields and Japanese JGB yields and hence a higher dollar versus yen. The Bank of Japan left its monetary policy unchanged during its meeting today while the Fed last night signaled it could scale back stimulus as soon as the next meeting. The euro is under pressure due to market rumors of the ECB is considering negative deposit rates. The broadly stronger dollar is also putting pressure on the euro. EURUSD fell to a low of 1.3412 in the Asian session, and ended with a 0.06% loss at 1.3428. GBPUSD ended the session down 0.08% at 1.6089. The Australian dollar took a beating after disappointing data from China, which is Australia’s largest trading partner. AUDUSD closed the Asian session with a 0.2% loss at 0.9304. The Chinese HSBC manufacturing flash PMI index of business confidence for November dipped to 50.4 compared to 50.9 the previous month.

Market sentiment remains positive as it is still being characterized by the loose monetary policies of the world’s major central banks – Federal Reserve, European Central Bank and Bank of Japan. Last week, the Fed President nominee Janet Yellen signaled she will continue the Fed’s stimulus program, which helped keep risk appetite supported. Most major currency pairs traded in familiar ranges, with the riskier currencies holding on to gains from the risk rally produced at the end of last week. Sterling carved a new two-week high in Asia today, with GBPUSD hitting a session high of $1.6141, while the euro breached a key level of $1.3500, peaking at $1.3506 before steadying at $1.3490. The dollar/yen pair is the main currency in focus after it broke above the key psychological level of 100 yen last week. USDJPY eased back down today but found support at this level, after opening in Asian at 100.25 yen. The yen is expected to weaken further based on the Bank of Japan’s monetary easing policies. There are a couple of key releases from Japan this week, including trade balance and the BoJ meeting, both of which will be key drivers for the Japanese currency. Aussie was the biggest mover in Asia this morning, with AUDUSD rising to a high of $0.9412, gaining 0.4% percent.