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Australian Dollar Slides Against Majors; China GDP In Focus

The Australian dollar fell against other major currencies in the European session on Friday, as traders became cautious ahead of China growth data due next week.

Economists currently forecast the country's second quarter GDP to reach 7.5 percent on an annual basis, down from 7.7 percent in the first quarter.

The recent weak trade and manufacturing reports out of China underscored worries for further slowdown of country's economic growth.

Chinese Finance Minister Lou Jiwei signaled the world's second-biggest economy could expand 7 percent this year, less than the government forecast of 7.5 percent growth.

While attending a two-day China-U.S. Strategic and Economic Dialogue, Lou said the slower growth rate is the result of China's economic restructuring. However, the 7 percent forecast should not be considered as the bottom line, Xinhua news agency said citing Lou's remarks at the event.

China is Australia's biggest trading partner and the key destination for the country's exports.

In economic news, the total number of owner-occupied home loans in Australia was up a seasonally adjusted 1.8 percent on month in May, the Australian Bureau of Statistics said early in the day, standing at 49,636.

That missed forecasts for a gain of 2.2 percent following the 1.2 percent increase in April.

The aussie hit a 4-day low of 0.9039 against the greenback, retreating from a 2-week high of 0.9306 hit on Thursday. The aussie-greenback pair may test support around the 0.888 level.

The aussie depreciated to 1.1597 against the NZ dollar, a level not seen since November 2008. The next downside target level for the aussie is seen at 1.15 area.

The aussie touched near a 3-year low of 0.9386 against the loonie, down from yesterday's closing quote of 0.9515. If the aussie continues its bear run, it may face support around the 0.92 zone.

The aussie reached 1.4443 against the euro for the first time since August 2010. On the downside, the aussie may test support around the 1.52 level.

Eurozone industrial production declined 0.3 percent month-on-month in May, in line with expectations, reversing April's 0.5 percent rise, data from Eurostat showed today.

The decline was driven by a 1.5 percent fall in capital goods output and 2.3 percent decrease in durable consumer goods.

The Australian currency slipped to more than a 2-week low of 89.76 against the yen, off its early high of 91.04. The next probable support for the aussie lies around the 89.00 level.

The Bank of Japan expects exports and industrial production to increase moderately as the economy recovers, according to the central bank's monthly report released today.

On Thursday, the bank upgraded its assessment of the economy, saying "Japan's economy is starting to recover moderately."

The U.S. producer price index for June and University of Michigan's consumer confidence for July are expected in the North American session.

by RTTNews Staff Writer

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