Euro posts weekly loss vs dollar, yen

* Euro posts 1st weekly loss in three versus dollar
    * Optimism about ECB action waning
    * Chinese data knocks Australian dollar

    By Wanfeng Zhou
    NEW YORK, Aug 10 (Reuters) - The euro posted its first
weekly drop against the dollar and yen in three weeks on Friday
as investors refocused on the uncertainty surrounding possible
European Central Bank action to contain the debt crisis and
deteriorating growth in the euro zone.
    A weaker-than-expected rise in Chinese exports, which
followed disappointing German data earlier this week, stoked
concerns about global economic growth. That boosted the
safe-haven dollar and yen and pressured commodity-linked
currencies such as the Australian and Canadian dollars.
    Investors booked profits on a rally sparked by ECB President
Mario Draghi, who said the bank would do whatever it takes to
save the euro, including buying bonds of stressed countries to
bring down borrowing costs.
    But after the initial euphoria, markets began to realize
that any intervention would depend on troubled countries
activating the euro zone's rescue funds first. The permanent ESM
fund still needs a green light from the German Constitutional
Court, which rules on Sept. 12.
    "The resistance of German lawmakers and central bankers to
wholesale central bank intervention in sovereign debt markets is
likely to result in a watered-down version of any plan by the
ECB and is likely to disappoint market participants," said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange in
Washington.
    The euro fell 0.1 percent to $1.2290, pulling further
away from a one-month high of $1.2443 set on Reuters data on
Monday. It had earlier hit a one-week low of $1.2239 after
breaking support in the $1.2250 level.
    It also fell 0.5 percent to 96.21 yen.
    On the week, the euro lost 0.8 percent against the dollar
and 1.3 percent versus the yen.
    Data from the Commodity Futures Trading Commission released
on Friday showed speculators reduced bets against the euro in
the latest week to 131,711 contracts from 138,994 in the week
earlier. 
    Comments from Germany's economy ministry that the country
faced "significant risks" linked to the euro zone crisis also
weighed on the region's common currency.  
    Investors also looked ahead to next week's data on euro zone
second-quarter economic output, which is expected to show a
contraction and is likely to put pressure on the ECB to
cut interest rates, a factor that could weigh on the euro.
    Despite the euro's fall, implied volatilities are subdued.
The one-month euro/dollar implied volatility traded
around 9 percent, against 10 percent a week ago. Option traders
said that unless the euro broke below $1.2250, volatility would
drift lower.
    Lucy Lillicrap, senior risk consultant at global payments
company AFEX Markets Plc in London, said the euro's downtrend
this year may be coming to an end, and a rise to $1.2750 would
confirm this view.
    "Overall, the markets are willing to give the ECB the
benefit of the doubt. The ECB is out there saying it will do
something and that in itself is a positive," she said.
    The dollar slid 0.4 percent to 78.25 yen and lost 0.4
percent this week.
    Japan's upper house of parliament passed a controversial
sales tax bill, a step analysts said could eventually exert
pressure on the Bank of Japan to ease monetary policy further in
coming months. 
    The Canadian dollar weakened after data showed
Canada's economy unexpectedly lost 30,400 jobs in July in a
third disappointing month for the labor market. 
    The U.S. currency rose as high as C$0.9970 and last traded
at C$0.9910, little changed on the day.
    The Australian dollar fell to $1.0575, a day after
touching $1.0615, its highest since March 20.
    Data showed Chinese exports grew just 1.0 percent in July
year-on-year, below expectations for an 8.6 percent increase,
while imports grew 4.7 percent compared with a forecast for a
7.2 percent rise.