FOREX-Euro firmer, eyes on European PMI data

The euro edged higher on Tuesday but could come under pressure if euro zone manufacturing data point to more downside risk in a market already fretting about a global recession.

The Australian dollar clawed higher after a gauge of Chinese manufacturing was not as weak as some had feared, and was last up 0.6 percent on the day at $1.0460 .

HSBC's China flash Purchasing Managers' Index showed the Chinese factory sector may have slowed slightly in August for a second straight month. The reading, however, still edged up to 49.8 in August, better than July's final reading.

There had been vague market rumours earlier that the China flash PMI might turn out to be much weaker.

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.

"The current stabilisation in risk is conditional on European PMIs not disappointing sharply. Weaker growth in Germany would lead the market to think that help for peripheral Europe will be harder to come back," warned Sebastien Galy, analyst at Societe Generale.

The euro inched up 0.1 percent to $1.4370 , with support in the $1.4340-45 area, where traders said there are some buy orders lurking.

Lower down, there is talk of good bids at $1.4260 to $1.4270, right around support at last Friday's intraday low near $1.4259, while selling interest starts from $1.4420 with more selling interest at $1.4450. more