* Euro dips, data shows Spanish banks' reliance on ECB
* Still expected to hold within $1.30-$1.35 range
* Aussie falls as China growth disappoints
By Nia Williams
LONDON, April 13 The euro slipped on Friday as
Spanish bond yields rose on data showing the country's banks
were relying heavily on ECB lending, although the common
currency looked unlikely to break out of its recent range
against the dollar.
Disappointing Chinese GDP data also weighed on the euro and
pushed the Australian dollar down 0.5 percent against its U.S.
counterpart. The Chinese economy grew 8.1 percent in the first
quarter of 2012, below forecasts of 8.3 percent.
Some market players said the Aussie's fall may be temporary,
with speculation of another round of quantitative easing (QE)
from the U.S. Federal Reserve likely to support riskier assets.
With little economic data scheduled for the European session
trade was relatively subdued. But the euro's fall on the news
from Spain highlighted the currency's vulnerability to any
sudden blowouts in peripheral bond yields, analysts said.
Spanish yields have climbed in recent weeks to just below 6
percent on concerns about the country's fiscal position, and
Italian yields were also dragged higher on Friday.
The common currency was last down 0.3 percent on the
day versus the dollar at $1.3150, with market players citing
selling by an Asian central bank.
"This (latest data) is starting to put spreads under a
little bit of pressure," said Lauren Rosborough, senior currency
strategist at Societe Generale.
Spain's banks relied heavily on European Central Bank
liquidity lines in March and borrowed a record 316.3 billion
euros, almost double the amount borrowed in February.
Rosborough said although market players were aware Spanish
banks were leaning heavily on ECB liquidity lines, confirmation
of the bad news was a negative for the euro.
"There's no new news but on the lack of other information
and data the market is drifting in one direction," she said.
Despite edging lower the euro was seen as unlikely to break
out of the lower end of the $1.30-$1.35 range it has traded in
Traders reported automated stop-loss euro buy orders above
resistance at Thursday's high and the 21-day moving average
around $1.3212. The euro could break higher if those stops are
triggered but most analysts said any moves would be limited.
"We would need a clear-cut statement of QE3 or anything new
on the debt crisis to break out of this range," said Antje
Praefcke, currency strategist at Commerzbank.
The Australian dollar, strongly influenced by China data due
to commodity-driven Australia's reliance on Chinese demand, fell
0.5 percent to a session low of US$1.0370.
The move pared gains of 1.2 percent on Thursday which were
driven by surprisingly strong local jobs report and solid loan
numbers from China.
Market players reported stop-loss buy orders building around
$1.4060-65, above Thursday's high, and some said the Aussie
could rebound after the sell-off. Nomura put out a long Aussie
trade recommendation against the dollar, targeting US$1.0800
with a stop at US$1.0200.
"We view yesterday's strong Australian employment and
Chinese loan data as more important than the overnight Chinese
Q1 GDP release and hence see the overnight sell-off in AUD as
providing good levels to go long," Nomura analyst Geoff Kendrick
said in a note.
Major currencies showed no reaction to news that North
Korea's much hyped long-range rocket crashed into the sea
shortly after launch on Friday.
The dollar was steady versus the yen at 80.93,
extending gains from Wednesday's six-week low of 80.57 yen.
Market players were also looking ahead to U.S. CPI inflation
data due at 1230 GMT. Analysts said any sign of stronger
inflation could limit the Fed's scope to ease policy
However, the Dec 2013 fed funds future has cancelled out the
possibility of a 0.25 point hike at the end of 2013, underlining
the recent shift in expectations back toward additional Fed