Australia’s dollar strengthened from near a seven-month low after an industry report showed Chinese manufacturing unexpectedly expanded this month. The Aussie rose versus all of its 31 major counterparts as the improvement in the China Purchasing Managers Index suggested stimulus is helping the economy in Australia’s largest trading partner. China’s yuan advanced for a second day. The yen held gains after appreciating earlier as the U.S. said it conducted its first airstrikes in Syria. “We’re seeing this knee-jerk rebound in the Aussie,” said Desmond Chua, a strategist at CMC Markets in Singapore. “That shouldn’t be surprising, given that there was a lot of priced-in expectations for the manufacturing PMI to come in much weaker.” Australia’s dollar rose 0.5 percent to 89.16 U.S. cents at 6:45 a.m. in London after sliding to 88.53 cents yesterday, the lowest level since Feb. 4. The yen gained 0.1 percent to 108.71 per dollar after earlier appreciating as much as 0.2 percent.Japan’s currency rose 0.1 percent at 139.72 per euro. The euro was little changed at $1.2852. Japanese financial markets are shut today for a public holiday. China’s preliminary Purchasing Managers Index from HSBC Holdings Plc and Markit Economics climbed to 50.5, compared with the median estimate of 50 in a Bloomberg News survey and August’s final reading of 50.2. Numbers above 50 indicate expansion. Measures of new orders and new export orders increased at a faster rate, the report showed.Aussie’s Slide Australia’s dollar has tumbled 2.1 percent in the past month, the worst performer after the yen of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The U.S. dollar rose 2.8 percent, while the yen slid 2.2 percent. The Aussie has slumped in September amid concern China’s economy is slowing and as the Federal Reserve moves closer to raising interest rates while the Reserve Bank of Australia keeps borrowing costs on hold. “The market is getting itself very short of the Aussie,” said Ray Attrill, global co-head of currency strategy at National Australia Bank in Sydney. “At some point, we may well get a squeeze higher.” Australia’s currency will rise to 90 cents by the end of this month and end this year around 88 cents, he said. A short position is a bet an asset will decline.Yuan Forwards China’s yuan gained 0.02 percent 6.1391 per dollar. Twelve-month non-deliverable forwards on the currency gained 0.1 percent to 6.2368. The yen advanced as investors sought safer assets after the U.S. said it conducted its first airstrikes in Syria. The operation is an expansion of President Barack Obama’s effort to “degrade and ultimately destroy” the terrorist Islamic State. “U.S. military and partner nation forces are undertaking military action against ISIL terrorists in Syria using a mix of fighter, bomber and Tomahawk Land Attack Missiles,” Pentagon Press Secretary Rear Admiral John Kirby said in an e-mailed statement. Investors should bet the euro will weaken as it has become an attractive funding currency for higher-yielding investments, according to BNP Paribas SA. The European Central Bank can implement more stimulus if required to stave off deflation, President Mario Draghi said yesterday. The ECB cut its deposit rate to minus 0.2 percent at this month’s meeting. A preliminary PMI for manufacturing in the euro area slipped to 50.6 this month from 50.7 in August and a services gauge fell to 53 from 53.1, according to Bloomberg surveys before Markit Economics releases the figures today. “We expect Tuesday’s flash PMIs to show further softening and once again highlight euro-zone underperformance,” Daniel Katzive and Vassili Serebriakov, currency strategists at BNP in New York, wrote in a note to clients. “The euro remains an attractive funding currency.” source