FOREX-Euro rises as market eyes German data, Aussie recovers
* Euro rises, may gain from German data at 1000 GMT
* Gains seen limited due to threat of more ECB rate cuts
* Upbeat China trade data supports euro and Aussie dollar
* New Zealand dollar slides as RBNZ says it has intervened
LONDON, May 8 (Reuters) - The euro rose against the dollar on Wednesday and could gain further if German data due later is strong, while the Australian dollar firmed after forecast-beating Chinese trade figures.
But the New Zealand dollar fell after the country's central bank said it had intervened to try to restrain the strength of the currency.
The euro was up 0.1 percent at $1.3092, holding firm after data on Tuesday showed German industrial orders unexpectedly rose. Traders reported strong bids at $1.3050.
Traders said the euro could head closer to its $1.3243 May 1 peak if German industrial output data at 1000 GMT was similarly strong as this could temper the risk of more euro zone interest rate cuts.
But gains were expected to be limited given the fragility of the euro zone economy, which has prompted the European Central Bank to hint its deposit rate could be cut to negative.
However, the euro has held up well recently, helped by falling borrowing costs in peripheral euro zone countries. One-month implied volatilities in euro/dollar remain near their lowest since January, suggesting investors are reluctant to bet on sharp falls in the euro.
"Euro/dollar is likely to trade sideways for now, with a risk to the downside," said Niels Christensen, currency strategist at Nordea in Copenhagen.
He said firmer equity markets after strong Chinese trade data weighed on the safe-haven U.S. dollar and helped the euro. But he expected rallies in the euro to trigger selling because of the prospect of negative deposit rates.
The Australian dollar, which tends to gain on good news from China given Australia's strong trade links there, rose 0.6 percent to $1.0200, recovering from a two-month low of $1.0155 hit after Tuesday's rate cut in Australia.
The dollar fell 0.1 percent against a basket of currencies to 82.149 and down 0.1 percent at 98.89 yen.
The New Zealand dollar fell 0.8 percent to $0.8388 after the central bank's announcement, although analysts were sceptical about how much impact intervention could have.
But Hamish Pepper, currency strategist for Barclays in Singapore, said the impact was likely to be short-lived given the central bank was "approaching a tightening cycle".
However, he said the kiwi could fall towards $0.82 if data shows the U.S. economy recovering.