2014.03.3104:44:34UTC+00Yen On Defense, Euro restrain ahead of inflation data

The yen remained on the defensive early on Monday trading action, achieving a fresh six-year low on the New Zealand dollar as demand for the safe-haven currency waned in the middle of expectations of more stimulus from China.

The dollar exchanged at 102.87 yen, not far from Friday's one-week topmost mark of 102.98, while the euro briefly reached a one-week high of 141.74. The kiwi rallied as far as 89.23 yen, a level not seen since November 2007.

Traders said China's official manufacturing PMI survey due on Tuesday will be closely checked after a latest string of unsatisfactory data pointed to a slowdown in the world's second largest economy.

"We expect a decline to 49.8 in March from 50.2 in February, falling below 50 for the first time in 17 months, as growth momentum continues to fade. This should further heighten the urgency to ease policy," analysts at Nomura wrote in a note to clients.

Investors will also closely check on euro zone inflation numbers due later on Monday after data late last week revealed a key measure of German inflation surprisingly slowed in March.

The soft reading raises the downbeat risk for euro zone inflation, which is set to stay in what European Central Bank (ECB) President Mario Draghi has called the "danger zone" of under 1 percent for a sixth month.

Yet, Bundesbank President Jens Weidmann on Saturday stated that the ECB should not over-react to the slowdown in inflation as it was caused largely by temporary cyclical determinants.

In any situation, traders stated that a down number will no doubt kick the ECB under more pressure to move and that would be a bad effect for the euro.

The common currency last exchanged at $1.3747, having plumbed a one-month low of $1.3704 on Friday.

In contrary, commodity currencies such as the Australian and New Zealand dollars have been soaring high on prospects of more stimulus from China.

The Aussie scaled a four-month topmost mark just shy of 93 U.S. cents last Friday, while its Antipodean counterpart reach a 2-1/2 year high near 87 U.S. cents.

The kiwi, further aided by the likelihood of more interest rate boosts at home, appeared on the right pace to retest its post-float peak of $0.8842 set in late 2011.