By Satomi Noguchi
TOKYO, Feb 14 (Reuters) - The dollar was little changed near
a one-month high against the yen on Thursday after surprisingly
strong U.S retail sales data eased some concerns that the U.S.
economy is falling into a recession.
The Australian dollar jumped against major currencies after a
strong jobs report added to the chances of the Reserve Bank of
Australia hiking interest rates again in March after a lift
earlier this month to an 11-year high of 7 percent.
The dollar and higher-yielding currencies got a boost on
Wednesday from data showing U.S. retail sales rose 0.3 percent in
January, contrary to Wall Street forecasts for a slight drop.
But traders said the outlook for the U.S. economy remains
uncertain, limiting any potential dollar gains.
"As long as U.S. housing prices slide, the possibility of
slower consumer spending remains," said a forex trader at a big
Japanese bank. "Market players are not yet comfortable about the
U.S. economy enough to buy the dollar aggressively."
The dollar has bounced back against the euro and yen this
month, partly as investors see the European Central Bank
following the Federal Reserve and other major central banks in
cutting rates later this year.
Investors are now looking ahead to comments from Fed Chairman
Ben Bernanke later in the day. Bernanke will speak on the U.S.
economy and financial markets before the Senate Banking
Committee.
The Fed has slashed rates to 3 percent from 5.25 percent in
the last five months in its bid to stave off a deeper economic
slump.
The dollar <JPY=> was little changed from late U.S. trade on
Wednesday at 108.25 yen, staying near a one-month high of 108.38
yen reached the previous session in a broad recovery from a
2-1/2-year low of 104.95 yen last month.
The euro drifted sideways at $1.4570 <EUR=>, while the single
currency dipped to 157.71 yen <EURJPY=R> from around 157.80 yen
late in New York trade.
The Australian dollar jumped 0.7 percent to a high of $0.9032
<AUD=D4> after data showed the country's employment rose 26,800
in January, nearly double expectations, while the jobless rate
fell to a record low. []
The Aussie climbed 0.7 percent and reached a one-month high
of 97.70 yen <AUDJPY=R> .
DOLLAR ALREADY BATTERED
Traders said the dollar may not slide much more given that it
has already tumbled from the Fed's aggressive rate cuts, the big
losses at U.S. financial firms and the prospect of a sharp
economic downturn.
"There is still wariness about the chance of more news of
credit problems and additional losses at financial firms. But
we've heard a lot of that already and the market has got a bit
immune to dollar-negative news," said Shuichi Kanehira, senior
trader at Mizuho Corporate Bank.
Reduced currency volatility and stock market gains could
boost demand for carry trades, in which investors borrow
low-yielding yen to fund purchases of higher-yielding assets.
Implied volatility on dollar/yen <JPYVOL>, a gauge of how
much the options market expects the currency pair to move over a
given time frame, dipped on Thursday to its lowest levels of the
year on a one-month basis.
But market players would likely remain wary of such
leveraged, risky positions for now, traders said.
The market reacted little to a report that Japan's economy
grew 0.9 percent in the last quarter of 2007, more than twice
market expectations on the back of solid capital spending and
exports. []
The data cooled some expectations that the Bank of Japan
could cut rates this year from the already low 0.5 percent and
gave a boost to Japanese stocks.The Nikkei share average <>
surged more than 4 percent. []
(Additional reporting by Rika Otsuka; editing by Eric Burroughs)
