FOREX-Euro, Aussie slip after China GDP

Fri Apr 13, 2012 4:55am EDT

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* Euro dips, vulnerable to Spanish bond pressure

* Expected to hold within $1.30-$1.35 range

* Aussie falls as China growth disappoints

By Nia Williams

LONDON, April 13 (Reuters) - The euro dipped along with the Australian dollar on Friday after disappointing Chinese GDP data, and the single currency remained vulnerable to euro zone debt concerns but was not expected to break out of its recent trading range against the dollar.

The Aussie, strongly influenced by China data due to commodity-driven Australia's reliance on Chinese demand, came under pressure after data showed China's economy grew 8.1 percent in the first quarter of 2012, below forecasts of 8.3 percent.

Some market players said the Aussie's fall may be temporary, with speculation of another round of quantitative easing (QE) from the U.S. Federal Reserve likely to support riskier assets.

Analysts said with little data scheduled, trading was likely to be subdued during the European session. The euro was vulnerable, however, to any sudden blowouts in Spanish bond yields, which have climbed in recent weeks on concerns about Spain's fiscal position.

The common currency was last down 0.2 percent on the day versus the dollar at $1.3156. It was seen as unlikely to break out of the lower end of the $1.30-$1.35 range it has traded in since January.

"Markets are illiquid so we have a risk yields move or there is stop-loss hunting and we see a strong move in one direction or another," said Antje Praefcke, currency strategist at Commerzbank.

"But we would need a clear-cut statement of QE3 or anything new on the debt crisis to break out of this range."

Traders reported automated stop loss euro buy orders above resistance at Thursday's high and the 21-day moving average around $1.3212. With trading volumes still thin in the aftermath of the Easter break, the euro could break higher if those stops are triggered.

Worries about euro zone debt problems receded slightly on Thursday after Italy cleared its latest round of bond auctions, but Spanish 10-year yields continued to trade just below 6 percent.

AUSSIE PRESSURED

The Australian dollar fell 0.4 percent to US$1.0391 , near a session low of US$1.0381 after the GDP data from China, Australia's biggest export market. The move pared gains of 1.2 percent on Thursday which were driven by surprisingly strong local jobs report and solid loan numbers from China.

Market players reported stop-loss orders building above US$1.0465, Thursday's high.

The chances of the euro and the Aussie clearing major resistance remained in place, some analysts said, as other Chinese data on Friday such as March retail sales and industrial output came in above expectations.

"While there was a knee-jerk market reaction to softer-than-expected GDP, figures for March were not that bad, which suggests some stabilisation after weakness in earlier months," said Bank of Tokyo-Mitsubishi UFJ analyst Teppei Ino.

Major currencies showed no reaction to news that North Korea's much hyped long-range rocket crashed into the sea shortly after launch on Friday.

The dollar was steady versus the yen at 80.90, extending gains from Wednesday's six-week low of 80.57 yen.

Market players were also looking ahead to U.S. CPI inflation data due at 1230 GMT. Analysts said any sign of stronger inflation could limit the Fed's scope to ease policy further.

However, the Dec 2013 fed funds future has fully abandoned the possibility of a 0.25 point hike at the end of 2013, underlining the recent shift in expectations back toward additional Fed easing.

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