* Dollar having worst day vs euro since mid-July
* China data boosts risk appetite, Aussie gains
* No yen intervention, focus shifts to Japan party race
* Longer-term concerns linger, Swiss franc up vs dollar
(Adds details, updates prices, changes byline)
By Nick Olivari
NEW YORK, Sept 13 (Reuters) - The dollar was on track for
its biggest one-day slide against the euro in two months on
Monday as strong Chinese data boosted currencies of countries
like Australia that are big sellers to the world's second
largest economy.
Thanks to recent better-than-expected U.S. employment data
and new global banking rules, investors began the week in an
upbeat mood. New data showing Chinese factories ramped up
production last month and money growth beat expectations backed
the view that the markets' outlook had grown too gloomy. For
details, see []
Investors were also cheered when regulators agreed on new
capital requirements for banks on Sunday, with lenders given
more time than expected to comply with them. []
That helped drive the euro above $1.28 -- it fell below
$1.26 in late August -- placing it on target for its best daily
gain since July 15.
The high-yielding Australian dollar reached a five-month
peak of $0.9362 <AUD=>. Australia is a top supplier of raw
materials for China.
"There's no doubt that risk appetite has returned, and the
strong Chinese data reduces the risk of a global double-dip
recession," said Matthew Strauss, senior strategist at RBC
Capital Markets in Toronto.
The euro jumped 1.5 percent to last trade at $1.2868
<EUR=>. Earlier gains triggered automatic buy orders around
$1.2750. It also rose 0.9 percent to 107.62 yen <EURJPY=>.
The euro got a boost after the European Commission said it
expects the euro zone economy to grow almost twice as fast in
2010 as previously expected. []
Analysts said the euro was targeting $1.2920, a level it
failed to breach earlier this month, but cautioned it would
remain within its recent range unless it topped that level.
But analysts said longer-term worries remain about U.S.
growth and the health of the euro zone banking sector. That
pushed the dollar down 1.1 percent to 1.0082 Swiss francs
<CHF=>. The franc is a traditional safe-haven currency.
"People are getting short-term encouragement from recent
data but still have long-term concerns," said Brian Dolan,
chief strategist at Forex in Bedminster, New Jersey.
The dollar index <.DXY>, a non-traded calculation of the
dollar's performance against six currencies was at key
technical levels. The index was last down 1 percent at 81.895.
The index is currently seeing its biggest down-day since
rebounding from August lows and if sustained it increases the
odds for extending the index decline toward 81.58/50,
potentially re-testing the 80.745 August low over coming weeks,
said BNP Paribas in a note to clients.
YEN SLIPS, CHINA IN FOCUS
The dollar fell 0.6 percent to 83.63 yen <JPY=>, still near
a 15-year low around 83.34 yen on electronic trading platform
EBS <JPY=EBS>. The low recorded by Reuters data is 83.32.
That kept investors on alert to see whether Japanese
authorities would intervene to weaken the yen ahead of a ruling
party leadership vote on Tuesday.
If challenger Ichiro Ozawa ousts Prime Minister Naoto Kan,
analysts expect the dollar to rise against the yen, as Ozawa
has advocated strong intervention to curb the yen's strength.
Traders said bids from Japanese importers around 83.50-80
yen were offset by exporter offers reported above 84.20 yen.
Speculators raised bets slightly in favor of the yen last
week, according to CFTC data, while three-month risk reversal
was at -1.9, according to Reuters data, still with a bias to
dollar puts and yen calls. []
Both indicate there is still a bullish bias on the yen.
Were Japan to intervene, it is expected to act alone, with
U.S. authorities more focused on persuading China to allow more
yuan appreciation.
Treasury Secretary Timothy Geithner was due to discuss
China's exchange rate practices before Congress this week.
In remarks published in the Wall Street Journal on Monday,
he said China has made "very, very little" progress on letting
the exchange rate reflect market forces. []
China loosened the yuan's peg against the dollar in June,
but the dollar has only fallen about 1 percent since then.
