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FOREX-Australian dollar strengthens on encouraging Chinese data

Published 15/07/2019, 01:32 pm
© Reuters.  FOREX-Australian dollar strengthens on encouraging Chinese data
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* Australian dollar rises 0.2% after Chinese Q2, June data

* Chinese retail sales, output beats expectations

* Chinese quarterly GDP growth hits slowest since 1992

* Yen, Swiss franc ease after data release

By Tom Westbrook

SYDNEY, July 15 (Reuters) - The Australian dollar strengthened on stronger-than-expected economic data from China, which some analysts saw as signalling that moves aimed at reviving spending in the world's second biggest economy are having some success.

The Aussie AUD= gained against the U.S. dollar USD= , which advanced against the safe-haven yen JPY= and the Swiss franc CHF= .

China's industrial output bounced in June from a 17-year low in the previous month. June retail sales surged 9.8% from a year earlier, compared with the 8.3% - a slowing from May's tepid figures - that polled analysts expected. Australian dollar rose almost 0.2% to $0.7024 after China's data release. The yuan CNY= strengthened against the dollar to touch its highest since last week.

"China's economy is finding a base and it was not as weak as feared, so risky currencies go up," said Imre Speizer head of NZ strategy at Westpac Banking Corporation WBC.AX in Auckland.

"The market is wanting to price a lot of risk into the Aussie," he said.

China's quarterly gross domestic product posted its slowest pace of growth in 27 years, as expected, growing by 6.2% in the June quarter compared to a year earlier. Attrill, head of forex strategy at National Australia Bank in Sydney, said Monday's figures, on the back of credit data on Friday, showed China's stimulus program is gaining traction.

"There are signs it is starting to work," he said.

"Whether you're building a railway between two cities in China or whether you're building stuff to sell to the U.S. it seems to need a lot of steel... it is still a good news story for Australia - that's certainly the way that the market has chosen to interpret the numbers."

The data also lifted the China-exposed New Zealand dollar NZD= by 0.18% to $0.6721.

The U.S. dollar, meanwhile, remains under pressure on expectations of a Federal Reserve rate cut. Comments last week from Fed Chair Jerome Powell and Chicago Fed president Charles Evans indicated U.S. rate cuts are needed to boost inflation.

In the U.S., a 25 basis-point rate cut in July is priced in, along with an almost 20% chance of a 50 basis point cut.

Investors will be looking to U.S. retail sales figures due Tuesday and company earnings for signs of how shoppers and businesses are weathering the slowdown.

Against a basket of currencies .DXY the dollar held near a 10-day low at 96.865.

It gained against the yen to break 108.00, though still remains underneath resistance at 108.98. Monday is a national holiday in Japan and dollar-yen trading volumes were thin.

The greenback rose 0.1% to $0.9853 against the Swiss franc. The euro EUR= slipped back to $1.265 though remains stuck in a two-cent range that has held the single currency since June.

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