SYDNEY (Reuters) - The euro languished at two-year lows versus the greenback on Friday, while high-beta currencies like the Australian dollar nursed heavy losses as risk sentiment took a hit ahead of anxiously awaited Chinese economic data.
Due around 0200 GMT, the closely watched report is expected to show the world's second biggest economy grew 7.6 percent in the second quarter, its slowest pace in three years.
Markets fear the figures could be worse, darkening a global outlook already tainted by Europe's debt crisis.
The euro stood at $1.2207, having fallen as low as $1.2166 overnight, a level not seen since mid-2010. Immediate support is seen around $1.2151, the June 29, 2010 low, ahead of the 2010 trough of $1.1876.
"A dismal print may fuel concerns for a 'hard landing', and market sentiment may weaken further over the remainder of the week as the outlook for global growth deteriorates," said David Song, currency analyst at DailyFX.
An Italian bond sale and earnings results from JPMorgan Chase & Co (JPM.N) later on Friday provide even more excuses for investors not to take big positions into the weekend, traders said.
Commodity currencies bore the brunt of the risk selloff overnight, which also saw the U.S. S&P 500 equity index .SPX shed 0.5 percent.
Already pressured by disappointing jobs data at home, the Australian dollar dropped as much as 1-1/2 cents to $1.0101. It was last at $1.0143.
The Aussie also fell against the yen and euro, allowing the single currency to pull up to A$1.2033, from a lifetime low of A$1.1926 set earlier in the week.
Not surprisingly, both the safe-haven U.S. dollar and the yen fared the best. The dollar index .DXY stood at 83.608, having scaled a two-year peak of 83.829.
The greenback, however, underperformed the yen as U.S. Treasury yields fell towards historic lows on safety flows. The dollar bought 79.29 yen, down from Thursday's high of 79.97.
Some analysts argue the dollar's strength is likely to be short-lived as major central banks will eventually be forced to ease policy more aggressively in order to shore up growth.
That would bolster risk appetite, making high-beta currencies more attractive. It would also cement the dollar and euro as funding currencies of choice in carry trades.
"In China, we sense that top Chinese policymakers have become increasingly concerned over the strength of growth and more robust policy stimulus is likely to come," analysts at BNP Paribas wrote in a note.
"We maintain our bearish USD bias, especially against the commodity bloc. Positioning still suggests FX markets are more sensitive to moderately positive catalysts than to bearish catalysts."
Earlier this week, hopes of imminent policy action from the Federal Reserve were dashed after minutes of the June meeting indicated that policymakers would only act if the fragile recovery weakened further.
Editing by Wayne Cole