FOREX-Dollar falls as equities bounce; Aussie surges

* Australian dollar rises 1.5 percent vs U.S. dollar

* Strong Australian growth boosts risk sentiment

* But safe-haven demand for Swiss and yen may continue

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By Neal Armstrong

LONDON, Sept 1 (BestGrowthStock) – The dollar fell versus a basket
of currencies on Wednesday as upbeat data from China and
Australia revived shaky equity markets and gave a boost to risk
sentiment.

Australia’s economy grew at the fastest pace in three years
in the last quarter as households spent far more than expected
while exports enjoyed an Asian-driven boom, reviving the risk of
a further rise in interest rates and leading to a surge in the
Aussie dollar (AUD=D4: ). [ID:nSGE67U0L3]

Other data showed Chinese manufacturing staged a moderate
rebound in August, easing concerns about the pace of global
growth that are based on weakness in the United States.

“The Aussie seems to be driving things on the day. There’s a
bit of optimism in the market and the risk-on currencies are
benefiting,” said Paul Mackel, director of currency strategy at
HSBC.

At 0937 GMT, the Australian dollar was trading at 0.9055, up
1.6 percent on the day. European stocks were up 1 percent
(.FTEU3: ), with US stock futures pointing to a positive open
(.SPc1: ).

The Aussie’s rise contributed to a 0.7 percent fall in the
dollar versus a currency basket to 82.60, down from a 6-week
high hit last week at 83.559.

“We’ve seen a reprieve for risk from the data overnight but
I’m of the opinion you sell rallies in riskier currencies.” said
Kenneth Broux, Markets Strategist at Lloyds Banking Group.

“The market will keep buying safe havens such as the yen and
the Swiss franc if U.S. data continues to disappoint.”

The Swiss franc pulled back from a record high versus the
euro hit on Tuesday at 1.2850 francs on trading platform EBS, to
stand at 1.2955.

The euro (EUR=: ) traded with gains of around 0.8 percent
against the dollar at $1.2790. Traders said Asian demand had
triggered stop-losses at $1.2710, while a large option expiry at
$1.2800 was also highlighted, potentially having a magnetic
impact on the currency.

Versus the yen, the euro was up 0.6 percent at 107.45 yen
(EURJPY=R: ).

EYES ON JAPAN

The dollar was trading flat versus the yen (JPY=: ) at 84.08
yen, off earlier highs of 84.58 and still within shouting
distance of a 15-year low of 83.58 hit on EBS last week.

Dollar/yen hit the day’s high after Japanese ruling party
powerbroker Ichiro Ozawa, challenging Prime Minister Naoto Kan
in a party leadership vote, said he would implement steps
including intervention if the yen rose sharply. [ID:nTFD006532]

Ozawa, in a showdown with Kan in the Sept. 14 vote for
ruling party leader and hence prime minister, has a strong
political base within the ruling Democratic Party that could
threaten Kan’s position. [ID:nTOE68000C]

Many traders and analysts believe the dollar’s recent drop
against the yen, largely driven by falling U.S. bond yields,
would have to turn much more volatile or deeper for Japanese
authorities to take action on the currency.

A sharp drop in dollar/yen, such as 1 to 2 percent or more
in a single day towards the 80 yen level and below, is seen as
the most likely scenario that would prompt Japan to stick its
neck out and buy dollars. [ID:nTOE67U07V]

U.S. ADP employment data is due for release at 1215 GMT,
followed by the ISM Manufacturing report at 1400 GMT,
forerunners for Friday’s U.S. employment report, which is seen
as the key determinant of risk of the week.

“I don’t think we’ll really go anywhere until Friday’s U.S.
jobs data, where I think there’s a risk that non-farm payrolls
could come in below consensus,” said Broux at Lloyds.

(Editing by Patrick Graham)

FOREX-Dollar falls as equities bounce; Aussie surges