FOREX-Dollar firm, Aussie on defensive as focus turns to European, U.S. data

* Forex market shows little reaction to China data
* Focus on German, U.S. data due later in the day
* Aussie gives up 0.2%, touches more than 4-mth low
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Daniel Leussink
TOKYO, May 15 (Reuters) - The dollar held steady while the
Australian dollar hovered near a more than four-month low on
Wednesday, as traders awaited European and U.S. data for clues
on whether the worst is over for the global economy.
The foreign exchange market showed little reaction to
worse-than-expected growth in Chinese industrial output and
retail sales for April that underlined the need for Beijing to
roll out more stimulus measures to support the world's
second-largest economy. The dollar was supported as trade issues remained foremost
on investors' minds after U.S. President Donald Trump on Tuesday
insisted that trade talks with China had not
collapsed. "Investors will continue to monitor key barometer currency
pairs," said Nick Twidale, chief operating officer at Rakuten
Securities Australia in Sydney.
"The Aussie and (the Chinese) yuan remain under pressure
near recent lows," Twidale said in a note. "Traders will be
looking for more confirmation of a cooling in the trade war
before looking to enter into fresh long positions."
The dollar index against a basket of six key rivals was
largely steady at 97.514 .DXY , having risen 0.2% during the
previous session.
The market focuses next on euro zone and German gross
domestic product (GDP) reports and U.S. retail sales and
industrial product for April due later on Wednesday for pointers
on the state of the global economy.
GDP in the 19 countries sharing the euro rose 0.4%
quarter-on-quarter in the first three months of 2019, according
to a preliminary reading released late last month. "Given China's weak data, markets won't be able to avoid a
reaction if the U.S. figures are weak as well," said Ayako Sera,
market strategist at Sumitomo Mitsui Trust Bank.
"The question is whether we'll see weak results occurring in
succession, or if Chinese data are weak, while U.S. figures
remain strong," she said.
The euro was last a shade firmer at $1.1206 EUR= .
The single currency ended the previous session weaker after
Italy's deputy prime minister said the country was ready to
break European Union budget rules on debt levels if necessary to
boost employment. The Australian dollar dipped 0.2% to $0.6928 AUD=D4 , as it
hovered close to its lowest since early January after data
showed the pace of growth in Australian wages came to a halt
last quarter. The Aussie is also often seen as a proxy for Chinese growth
because of Australia's export-reliant economy and China being
the country's main destination for its commodities.
"If this trade situation continues to worsen, Aussie/yen is
probably a cross that we want to take a good look at," said Bart
Wakabayashi, Tokyo branch manager at State Street Bank.
"It will be hard to hold on to long Aussie positions, with
the oil situation what it is."
In the commodity market, U.S. crude and Brent crude futures
were both down after the American Petroleum Institute reported a
bigger-than-expected build in crude oil inventory. Against the yen, the dollar edged up to 109.65, adding to
gains made during the previous session, when it rose 0.3%.

(Editing by Sam Holmes and Jacqueline Wong)