* Commodity currencies continue to struggle
* Kiwi down 0.7 percent
* Euro steadies at 5-1/2 month high, yen falls again
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, April 26 The Australian and New Zealand
dollars sank on Wednesday, leading moves among major developed
currencies after Australian inflation data pointed to an economy
under strain from mediocre growth in China.
The euro pulled back from 5-1/2 month highs overnight
as the boost from the outcome of Sunday's first round of
France's presidential election faded, while the yen - a sufferer
this week from buoyant sentiment on stock markets - fell another
Traders said the Aussie, kiwi and Canadian dollars - all of
which normally gain when investors are feeling good about global
growth prospects - were still suffering from steady falls in a
number of major commodity markets since February.
While global stock markets have bounced to new highs since
the French vote, improved appetite for risk on currency markets
seems largely confined to Europe, spurred by expectations of a
change in the direction of European Central Bank policy in
Headline Australian inflation rose to 2.1 percent, initially
pushing the dollar higher, but the indicators of underlying core
inflation were less bright, dragging the currency down.
"The fundamental reason for Australia's problems is China
and the rotten time that commodities have had since February as
a result," said Bank of New York Mellon strategist Simon
The Aussie was down 0.6 percent at $0.7491 in early European
trade, its lowest since April 12. The kiwi lost 0.7
percent to $0.6898.
With global stocks enjoying another day of gains, the dollar
rose 0.3 percent to 111.38 yen, pulling further away from
a five-month low of 108.13 yen set last week.
The focus for the dollar will be on forthcoming U.S.
economic data, especially after a softening in some recent
indicators, said Teppei Ino, analyst for Bank of
Tokyo-Mitsubishi UFJ in Singapore.
"It's too early to say that the dollar will keep trending
higher and head above the peak it saw in March," Ino said,
referring to the dollar's March 10 high of 115.51 yen.
The Trump administration's plans for tax reforms are likely
to be another reference point for markets.
U.S. officials said late on Tuesday that Trump is proposing
to slash the corporate income tax rate and offer multinational
businesses a steep tax break on overseas profits brought into
the United States.
Analysts said there was still uncertainty over just how
quickly such fiscal policies would be implemented.
"Just presenting the plan doesn't mean the plan is going to
be passed," said Mitul Kotecha, head of Asia macro strategy for
"The reality is any tax changes or tax reforms or tax cuts,
may not take place for some time, and Congress at this point is
far from being agreed on what shape or form they are going to
For Reuters Live Markets blog on European and UK stock
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(Additional reporting by Masayuki Kitano in TOKYO, editing by