FOREX-Dollar edges higher, Aussie sags on China growth worries
* Aussie slips as HSBC's China flash PMI hits 11-mth low
* Dollar index firmer, inches away from 1-month low
* Market positioning may weigh on greenback -trader
SINGAPORE, July 24 (Reuters) - The dollar inched higher versus a basket of currencies and the Australian dollar slipped on Wednesday, as fresh signs of a slowdown in China's manufacturing sector weighed on broader risk sentiment.
The Australian dollar had set a one-month high earlier in the session as key measures of underlying inflation in Australia were taken as reducing chances for a cut in interest rates next month, though the data was mixed and views in the market on the likelihood of a rate cut remained split.
The Aussie, however, declined after the flash HSBC/Markit Purchasing Managers' Index came in at an 11-month low in July, while the U.S. dollar pushed broadly higher.
"Risk appetite is likely to be muted and the dollar should benefit as a result," said Roy Teo, FX strategist for ABN AMRO Bank, referring to the weakness in the gauge of Chinese manufacturing activity.
The dollar index, which measures the greenback's value against a basket of currencies, rose 0.2 percent to 82.093 , pulling away from a one-month low of 81.926 set on Tuesday.
The Australian dollar slipped 0.2 percent to $0.9267 , down from an intraday high of $0.9320, the Australian dollar's strongest level since late June.
The Aussie dollar is sensitive to economic data out of China, which is Australia's biggest export market.
The U.S. dollar took a breather from a recent bout of weakness, gaining 0.2 percent against the yen to about 99.63 yen . The euro eased 0.1 percent to $1.3211, down from a one-month high of $1.3239 that had been touched on Tuesday.
Still, some market players were cautious on the near-term outlook for the greenback, which has declined after Federal Reserve Chairman Ben Bernanke recently stressed the Fed will keep rates low for a long time to come, even if it started to scale back its asset purchases.
Recent price action suggests that market players are still long the dollar and such positioning could weigh on the greenback, said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo.