Better than expected Chinese manufacturing numbers helped risk-sensitive currencies, such as the Australian dollar and the euro, higher against rivals in Asia Tuesday, with any strength in European economic data later likely to extend the gains.

HSBC's preliminary PMI for China rose in August from the previous month. While the result remained below the 50 level, indicating a contraction, the on-month improvement was enough to encourage optimism that China, a global growth engine, isn't likely headed for a hard landing.

The dollar was nearly flat against the yen. Investors avoided major bets on the greenback ahead of a U.S. Federal Reserve symposium starting Friday in Jackson Hole, Wyo. They were also cautious about the yen as Japan's Finance Minister Yoshihiko Noda kept intervention concerns alive by saying he would step up vigilance on the market.

The market's focus now turns to flash PMI data for Germany, France and the euro zone due later in the day for clues on whether the region's deepening debt crisis is weighing on broader economic growth.

Market players are wary of any yen-selling intervention by Japanese authorities, in the wake of the dollar's drop to a record low around 75.94 yen late last week.

Since dollar/yen bounced around 3 yen from intraday lows the last time Japan conducted yen-selling intervention on Aug. 4, market players reckon that the dollar may get a similar lift if Japanese authorities were to step in again.

Any dollar bounce in the event of intervention is likely to be met by strong dollar selling interest at levels around 79 yen to 80 yen.

EUR/USD

Initial support is seen at 1.4226 (Aug 15 low) followed by 1.4150 (Aug 12 low). Initial resistance is located at 1.4452 (Aug 18 high) followed by 1.4536 (Jul 27 high)

USD/JPY

Initial support is at 75.95 (Aug 19 low) followed by 75.00 (Psych level). Initial resistance is at 77.31 (Aug 10 high) followed by 78.47 (Aug 8 high).

AUD/USD

Initial support is at 1.0315 (Aug 19 low) followed by the 1.0246 (Aug 12 low). Initial resistance is at 1.0559 (Aug 18 high) followed by 1.0786 (Aug 3 High).e1e2e3

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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