* Yen broadly firmer in otherwise lacklustre session
* Risk appetite curbed by worries over China, Ukraine
* Aussie underperforms among major currencies
By Patrick Graham
LONDON, March 12 The Australian dollar and other
currencies closely linked to commodities markets struggled on
Wednesday after a 5 percent fall in copper prices overnight on
fears of fading demand from China.
Slowing growth and financial sector problems in the world's
second-biggest economy has been a dominant theme so far this
year, keeping currency market investors in safer plays like the
The Aussie, which lost ground in the final quarter of
last year but has recovered some ground since mid-January on the
back of improving domestic growth, fell back around 1 percent
during the U.S. trading day on Tuesday.
It was another 0.2 percent lower on the day in early trade
in Europe, drawing attention in markets where the major
currencies have been trading in tight ranges for the past month.
The euro was broadly flat against the dollar on the day.
"The focus this morning is on currencies like the Aussie,
the Chilean peso, the rand," said Daragh Maher, strategist with
HSBC in London.
"If there's any dominant theme its one of 'risk-off' given
the concern over the slowdown in China and its financial
problems. The next break in that might not come until we see
more Chinese numbers tomorrow."
Chinese industrial output, investment and retail sales
figures are all due at 0530 GMT on Thursday.
In Europe, industrial production numbers are due at 1000 GMT
while a raft of European Central Bank officials are due to speak
at a conference in Frankfurt.
After a boost following last week's ECB meeting, the euro
has struggled to make further ground, bouncing off levels around
$1.3915. Maher said he did not feel it looked capable of
breaking through $1.40 as flagged by some analysts this week.
"I suspect there will be a temptation to sell any rallies
(in the euro) from here," he said. "But it's not where the focus
is this morning."
The Chilean peso, little traded in Europe, and the South
African rand were among the big fallers following the sell-off
in commodities on Tuesday. Both are down more than 1 percent in
the past 24 hours.
There were indications that the fall for the Aussie might
also have been worse. Almost 40 percent - or around 3 billion
Australian dollars - of a sale of government bonds maturing in
2026 went to foreign investors on Wednesday, meaning bond
investors may have had to buy the Aussie as it fell.
The yen, steadier so far this year after losing a fifth of
its value against the dollar in 2013, was holding strong in
early European trading, up 0.1 percent against both the euro and
Tensions between Ukraine and Russia are also weighing on
appetite for risk globally. Russian stock indexes fell again on
Wednesday, reacting to the growing chance of western sanctions
over Crimea. Dealers said the rouble was propped up by central
"China seems to be slowing down and the Russian economy
seems to be facing pressure as stock prices there have fallen
sharply. That could slow emerging economies further," said
Takako Masai, manager of forex at Shinsei Bank in Tokyo.
"There is real concern about the global economy at the
moment, even if some short-term players may be thinking that the
impact of the Ukraine crisis will gradually subside," she added.
The New Zealand dollar held steady at $0.8469, with
investors reluctant to sell the kiwi given the Reserve Bank of
New Zealand (RBNZ) is widely expected to hike interest rates on
A Reuters poll this week showed the RBNZ is set to raise
rates by 25 basis points and lay out a path for a series of
further increases, taking the lead among developed economies in