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FOREX-Dollar steady before jobs data; Aussie firmer

Published 01/07/2010, 01:49 AM
Updated 01/07/2010, 01:51 AM
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* Aussie firmer after better-than-expected retail sales

* New Japan finmin seen less tolerant of stronger yen

* Focus on Friday's U.S. jobs data for dollar's direction

By Kaori Kaneko

TOKYO, Jan 7 (Reuters) - The dollar was steady against a basket of currencies on Thursday as investors waited for U.S. nonfarm payrolls data later in the week for hints on the greenback's direction.

The Australian dollar pared some of its gains on investor profit-taking after jumping to a 15-month high against the yen and a two-year peak against the euro on strong retail sales data, which added to the chances of another rise in interest rates in Australia as early as February.

A surprise move by China's central bank which saw it raise the auction yield of its three-month bills for the first time since mid-August weighed down commodity prices, prompting high-yielding currencies such as the Australian dollar to come off intraday peaks.

"If China takes a clearer stance on tightening liquidity in coming months, there is the possibility that market players will link this to a revaluation of the yuan, raising worries about commodity and share prices," said Jun Kato, senior chief analyst at Shinkin Central Bank Research Institute.

The Aussie rose 0.1 percent to $0.9202, having slipped off a one-month high of $0.9268 hit earlier in the day. Against the yen, the Australian currency was down 0.1 percent at 84.82 yen after jumping to 85.54 yen, its highest since late September 2008.

On the euro, the Aussie hit a new two-year high of 0.6415 euros.

The New Zealand dollar was steady at $0.7377, shedding gains after touching $0.7433, its highest since late November.

The dollar index, which measures the value of the greenback against a basket of currencies, was steady at 77.507.

Traders are keen to see the nonfarm payrolls report for December on Friday, which could help shape the outlook for when the U.S. Federal Reserve may raise interest rates.

"Investors are waiting for the U.S. jobs report on Friday but the current climate in the market is one of investors willing to take risk," said Tomohiro Nishida, treasury department manager at Chuo Mitsui Trust and Banking.

The report is expected to show the economy shed 8,000 jobs in December, after a surprisingly small 11,000 drop in November, a Reuters poll showed.

The U.S. currency had lost ground against the euro on Wednesday when minutes from the Federal Reserve's latest policy meeting suggested the possibility of more stimulus measures for the U.S. economy.

The euro inched down 0.1 percent to $1.4399 after rising as high as $1.4435 on trading platform EBS on Wednesday.

The dollar slipped 0.1 percent to 92.24 yen, having risen about 0.7 percent the previous day.

The yen came under pressure after news of Japanese Finance Minister Hirohisa Fujii's resignation on Wednesday.

Japan has named Deputy Prime Minister Naoto Kan as finance minister, turning to a politician with less hawkish fiscal views than his predecessor and leaving markets unsure as to whether the government could rein in spending in the face of a frail economy and ballooning debt.

Although this had a limited impact on Thursday, Kan may be less tolerant of letting the yen strengthen and putting at risk a fragile export-led recovery from Japan's worst recession since World War Two.

"Kan gives the impression that he prefers a weaker yen over a stronger yen," said Mitsuru Sahara, chief manager of currency derivatives trading at Bank of Tokyo-Mitsubishi UFJ.

"But he is likely to become more cautious about making comments on exchange rates once he becomes finance minister. The market is so far showing limited reaction to Kan." (Additional reporting by Rika Otsuka; Editing by Joseph Radford)

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