* Euro recovering from overnight lows
* Sterling eyes BOE economic update
* China industrial production & retail sales also in focus
By Ian Chua
SYDNEY, Aug 13 The euro nursed only modest
losses early on Wednesday, having regained quite a bit of ground
as markets got over a closely watched report that showed a slump
in German economic sentiment.
The common currency last traded at $1.3369, after
coming within a whisker of a nine-month trough of $1.3333. Euro
bears emerged after German analyst and investor morale fell
sharply as the crisis in Ukraine took a toll.
"The German ZEW expectations survey disappointed yet again
after seven consecutive months of below-consensus prints. The
miss was the largest this year and continues to suggest further
loss of momentum," analysts at JPMorgan wrote in a note to
Yet, no follow-through selling in New York saw the euro
slowly recover and by the end of trade, it was down a mere 0.1
percent on the greenback.
Still, the common currency was among the worst performers in
what was another lacklustre session.
It's partial recovery knocked the dollar index to 81.504
from a near one-week peak of 81.676. Against the yen, the
euro fetched 136.75, off a low of 136.37.
With geopolitical risks seemingly pushed to the backseat for
now, the market will take its cues from a batch of economic data
out of Asia.
Up first, Japan's second quarter growth data due at 2350 GMT
is expected to show the economy shrank for the first time in
nearly two years.
Such an outcome could bolster expectations for more stimulus
from the Bank of Japan, which has so far maintained an upbeat
economic view despite recent soft data.
That could weigh on the yen, although currency markets
usually pay scant attention to Japanese data.
Later in the day, China's industrial production and retail
sales data will take centre stage.
That will be followed by an update of the Bank of England's
economic forecasts at 0930 GMT, with markets keen to see if
there will be any hint of whether interest rates will rise this
A more robust recovery and a sharp drop in unemployment have
markets betting on a rate rise either late this year or early in
Sterling managed to squeeze up to $1.6811 from a
two-month low of $1.6757, but expectations for clear policy
guidance are pretty low.
(Editing by Eric Meijer)