* Australian dollar soars after GDP reading
* Solid global economic data lifts risk appetite
* Investors await Friday's nonfarm payrolls report
(Adds comment, details, updates prices)
By Wanfeng Zhou
NEW YORK, Sept 1 (Reuters) - The U.S. dollar fell against
major currencies on Wednesday after upbeat data around the
world soothed worries about the health of the global economy,
boosting investors' appetite for riskier assets.
The U.S. manufacturing sector grew more quickly than
expected in August, China's factory activity regained momentum,
and Australia's economy grew at its fastest pace in three years
last quarter. [] []
The euro climbed above $1.2850 and the Australian dollar
soared 2 percent versus the U.S. currency as stocks and
commodities rallied amid reduced fears of a renewed global
slowdown.
Analysts cautioned, however, that the rally in risk
appetite could be short-lived as the global economy is by no
means out of the woods. They expect safe-haven currencies to
remain firm after the yen hit a 15-year high last week on fears
the U.S. economic recovery was faltering.
"What we've seen is a bit move away from the U.S. dollar,"
said Brendan McGrath, manager of business solutions at Custom
House, a Western Union company, in Victoria, British Columbia.
"Risk is back in favor a little bit today, mainly due to the
good Australian and Chinese data."
In midday trading, the ICE Futures U.S. dollar index, which
tracks the greenback versus a basket of six currencies, fell
0.9 percent to 82.490 <.DXY>.
The euro <EUR=> rose 0.9 percent to $1.2798.
The Australian dollar jumped 2.1 percent to US$0.9090
<AUD=>. It had earlier hit a session peak of US$0.9098, the
highest in three weeks, after Australian gross domestic product
data revived expectations of a further rise in interest rates.
In the United States, the Institute for Supply Management's
index of national factory activity rose to 56.3 in August from
55.5 in July. That was above market expectations for 53.0 and
helped investors shrug off a separate report showing U.S.
private employers unexpectedly cut 10,000 jobs in August.
[]
"Even though there are still many reasons to be concerned
about the outlook for the U.S. economy, the manufacturing ISM
report provided warm comfort for both currency and equity
investors," said Kathy Lien, director of currency research at
GFT in New York. "The real test of the economy will be Friday's
non-farm payrolls report."
The government's monthly report on payrolls is considered a
key indicator of the health of the labor market.
YEN LONGS
Against the yen, the dollar rose 0.4 percent to 84.49 yen
<JPY=>. It had earlier hit a session low of 83.69 yen,
according to Reuters data, within striking distance of a
15-year low of 83.58 set on electronic trading platform EBS
last Tuesday.
The euro climbed 1.3 percent to 108.12 yen <EURJPY=>.
The yen earlier came under pressure after Japanese ruling
party powerbroker Ichiro Ozawa, challenging Prime Minister
Naoto Kan in a party leadership vote, said he would implement
steps, including intervention, if the yen rose sharply.
[]
The yen's rapid advance in recent weeks prompted Japanese
authorities to announce easing measures on Monday to curb the
its strength to protect the country's exports. However, traders
and analysts said that short of direct intervention in the
foreign exchange markets, the yen is bound to test its all-time
high against the dollar of 79.75 yen set in April 1995.
Last week's data from the Commodity Futures Trading
Commission on currency speculators showed net long yen
positions rose to 51,069 contracts and total long yen positions
hit 63,086 contracts. Scotia Capital says record net yen long
positions posted at 65,920 contracts on March 25, 2008, with
record yen longs at 94,654 on March 4, 2008.
The larger the number of long yen contracts, the more
speculators will have to scramble to reverse positions to
prevent losses in the event of a decline in yen and a rally in
the dollar. The next report is due out on Friday.
In other trading, the dollar fell to 1.0066 Swiss francs
<CHF=>, its lowest since December 2009. It last traded at
1.0071 francs, down 0.7 percent.
(Additional reporting by Nick Olivari; Editing by Leslie
Adler)
