The Australian dollar fell on Thursday, as selling by model-based funds weighed on the currency against the yen, while it took in stride data that pointed to a mild slowdown in China, rather than a deeper one as some had feared. The Australian dollar slid in early Asian trade after the China Securities Journal reported the economy may lose momentum more than expected later this year.
It temporarily pared losses following the release of Chinese official data but soon started to ease again on the selling by model-based funds, traders said. The Australian dollar stood at $0.8772, down 0.7 percent on the day. It hit a two-month high of $0.8871 on Wednesday. It also dropped 1 percent to 77.28 yen. The euro erased its losses to change hands at $1.2722, not far from its two-month high of $1.2778 hit on Wednesday as traders bought back the currency. Long dogged by worries over eurozone debt problems the euro tends to benefit from rising risk appetite.
Investors will look to a raft of US data due later in the day, including industrial output, jobless claims and regional business activity, for clues to the health of the world's biggest economy. The dollar index stood at 83.344, down 0.1 percent on the day and not far from a two-month low of 83.205 hit on Wednesday.
The index is holding just above support at around 83.15, a 38.2 percent retracement of its rise from a low of 74.17 in November 2009 to a high of 88.59 on June 8. Against the yen, the dollar slipped 0.3 percent to 88.13 yen. Charts looked increasingly bearish for the dollar after the greenback failed the previous day to rise above 89.23 yen - a 38.2 percent Fibonacci retracement of the dollar's fall from its June high of 92.68 yen to a July 1 low of 86.96 yen, traders said. Sterling was little moved on the day at $1.5266, staying near a 10-week high of $1.5298 hit the previous day.