FOREX-Aussie pinned at 3-month lows on weak China data

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Abhinav Ramnarayan
LONDON, May 15 (Reuters) - The Australian dollar fell to its
lowest level in three months on Wednesday as grim data from
China increased worries about the global economy, while weak
domestic wage growth figures also dragged.
While improved risk appetite helped stabilize broader
currencies before the release of euro zone economic output
numbers, the Australian and New Zealand dollars led losers in
early European trading.
China on Wednesday reported surprisingly weaker growth in
retail sales and industrial output for April, adding pressure on
Beijing to roll out more stimulus as the trade war with the
United States rumbles on.
"We expected the data to be worse than last month, but this
is going to increase concerns about the state of the Chinese
economy. The market will be very nervous and looking out for the
PMI data," said Commerzbank FX strategist Esther Maria Reichelt.
The Aussie dollar AUD=D3 dropped as low as $0.6922, its
lowest level since Jan. 3 when a flash crash in the foreign
exchange markets rocked major currencies.
Barring that level, the currency was at its weakest in three
years and down 0.2 percent on the day.
The weak data gave further impetus to Aussie bears to add to
their negative bets with net outstanding short positions still
below 2019 highs of above $5.2 billion.
The Aussie is 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.
Domestic data added to the woes, with the pace of growth in
Australian wages stagnating.
Neighbouring New Zealand saw its currency NZD=D3 dip 0.1
percent to $0.6567.
The Chinese yuan itself was slightly improved on the day at
6.8993 per U.S. dollar, but still close to a five-month low hit
on Tuesday. CNH=D3
Data from the euro zone and the United States are set to
follow later in the session, and could in particular affect the
U.S. dollar as investors look for any impact the Sino-U.S. trade
conflict could have on the world's largest economy.
The euro, meanwhile, remained anchored at $1.1214 even as
initial estimates showed the German economy returned to growth
in the first quarter of 2019, after barely escaping a recession
in the second half of last year.