Asia Recap: AUD tumbles in response to China data

FXStreet (Bali) - The Australia Dollar was the big mover in Asia, with a downbeat Chinese HSBC PMI sending the currency over half a cent lower.

Since Australian is the major proxy trade of China, the disappointing read of 48.3 vs 49.5 expected saw algos and short term traders enter the AUD/USD in earnest, dragging the pair from 0.9010 to marginally break below the 0.8950 area.

According to some Ting Lu, Economist at Bank of America, traders should not put too much weight on today's Chinese data.

"Regarding the HSBC flash PMI, because the first 7 days are national holidays and many SMEs was not open until mid-Feb, the quality of this flash PMI should be quite low. This flash PMI has quite big market impact, but my suggestion is still to downplay it", Lu said.

The Japanese Yen was the main beneficiary to all the noise post China data, with USD/JPY regaining the 102.00 level from a 102.40 session high after equity traders sold-off the Nikkei 225, down more than 1.3%. Fundamentally, Japan posted yet another record trade deficit for Jan.

The New Zealand Dollar traded weak tracking the down move in the Australian Dollar. The NZD/USD came to test 0.8240 session low before stabilizing. It looks like the 0.84-0.81 range game will extend further.

Main headlines in Asia

NZ PPI input -0.7% q/q vs 2.2% prior

USD/CNY trading band in 2014 to widen in an orderly manner - Nomura

IMF urges European Central Bank to mull cutting interest rates below zero

Trend in Japan's trade deficit deteriorates further

China's HSBC/Markit Flash PMI collapses

Debate over Fed rate hikes evolving - WSJ

Fed's Williams optimistic on labor market/inflation