Dollar holds firm vs. euro; Aussie off lows after China GDP

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Credit: Reuters/Kim Hong-Ji

1 of 4. U.S. one-hundred dollar bills are seen in this photo illustration at a bank in Seoul August 2, 2013. Picture taken August 2, 2013.

The beleaguered Australian dollar got a bit of relief after China's annual economic growth in the October-December quarter of 2013 came in at 7.7 percent, down from 7.8 percent in the previous three months but slightly ahead of market expectations for growth of 7.6 percent.

'It's not a particularly good number but there wasn't any drop to levels below the 7.5 percent threshold,' said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation.

While the data might have spurred some short-covering in the Australian dollar, the impetus is unlikely to be strong enough to prompt traders to go long the Aussie dollar, he added.

The Australian dollar edged up 0.1 percent on the day to $0.8790. The Aussie, which had been hit by weak jobs data at home last week, fell to $0.8756 earlier on Monday, its lowest level in about 3-1/2 years.

Traders said the 87 U.S. cent area should provide good support, like it did back in 2010, although a break could see it test $0.8600 in a hurry.

The euro eased versus the U.S. dollar, slipping 0.1 percent to about $1.3530. The euro fell to $1.3508 earlier on Monday, its lowest level against the greenback in nearly two months.

Data on Friday showed U.S. industrial output rose at its fastest clip in 3-1/2 years in the fourth quarter, adding to other encouraging reports such as retail sales.

Richmond Fed President Jeffrey Lacker on Friday said signs of an improving labor market justified further reductions in the Fed's monthly bond purchases.

Against the yen, the dollar slipped 0.3 percent to around 104.03 yen. The dollar has retreated since rising to a five-year high of 105.45 yen in early January, having fallen to 102.85 yen on January 13, its lowest level in about a month.

There is some caution about the dollar's near-term outlook against the yen in the wake of the greenback's recent rally, said Adam Gilmour, head of FX and derivatives sales Asia-Pacific for Citigroup in Singapore.

'I can tell you from my discussions with a lot of investors last week, everybody was talking about how the whole market is long dollar/yen,' Gilmour said.

'People are still bullish dollar/yen, but they think it's gone too far, too fast,' he added.

The yen also pushed higher on some of the crosses, with the euro shedding 0.3 percent to 140.74 yen. Earlier on Monday, the euro touched a six-week low versus the yen at 140.33 yen.

Trading volumes could be dampened by a holiday in the United States on Monday.

(Editing by Shri Navaratnam)