Monday September 15, 2014 - 00:57:33 GMT
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Reuters - www.reuters.com
FOREX-Australian dollar knocked by China data, others steadier
* Aussie extends fall on disappointing China data
* China's factory output grows at weakest pace in nearly six years
* Fed policy meeting this week major risk event
By Cecile Lefort and Ian Chua
SYDNEY, Sept 15 (Reuters) - The Australian dollar came in the cross hairs of sellers first thing on Monday, sliding to a fresh six-month low after a set of disappointing Chinese data weighed on already soft demand.
In contrast, the dollar was flat against the yen, near a six-year peak of 107.39 set on Friday. The euro was also steady at $1.2961, having drifted up from a 14-month trough of $1.2859 last week.
"China data was the catalyst of the move lower. The Aussie has come a long way and is now feeling oversold," said a trader at a European bank in Singapore, tipping the currency to consolidate in the short-term.
The Australian dollar fell towards 90 U.S. cents, from around $0.9040 late in New York on Friday. It last traded at $0.9015.
It has tumbled four cents in 10 days and a break below key support at 90 cents could see a retracement all the way to $0.8660, the 2014 trough, traders said.
However, the trader said the Aussie will eventually crack below 90 cents and then hover in the high 80s.
Data released on Saturday showed China's factory output grew at the weakest pace in nearly six years in August, while growth in other key sectors also cooled.
The bearish data from China - Australia's major export market - has added to worries about a 40-percent slide in iron ore prices .IO62-CNI=SI this year and further soured sentiment for commodity currencies.
Across the Pacific, the Canadian dollar suffered a similar fate against its U.S. peer, which peaked at C$1.1099 - a level last seen in late March. The greenback was last at C$1.1088, having gained 3 Canadian cents in around 2 weeks.
Much of the pressure for the commodity-linked currencies came from a rising U.S. dollar as investors seemed to be repricing the risk the Federal Reserve could sound more hawkish at its policy meeting this week.
Also undermining is a sharp decline in prices of iron ore .IO62-CNI=SI, Australia's top export earner, retreating to their lowest in five years.
"The focus this week is on the FOMC meeting. The USD rally, and other market moves, have formed around an expectation that the Fed will begin preparing the market for an earlier than market priced rise in rates," said Emma Lawson, senior currency strategist at National Australia Bank.
"It will require a confirmation of that expected language change, and possible forecast change, to maintain the USD gains seen so far."
Trading is Asia is likely to be relatively subdued due to a public holiday in Japan. (Editing by Shri Navaratnam)
© Thomson Reuters 2014. All rights reserved.
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