* Dollar falls as investors see recent gains overdone
* China exports slump, reminder of global uncertainty
* Some analysts see further legs in euro strength
(Adds quotes, updates prices)
By Nick Olivari
NEW YORK, March 11 (Reuters) - The dollar fell on Wednesday
as investors expressed caution that recent gains had gone too
far, too fast given there has been no new fundamental news to
prompt demand for the U.S. currency.
The dollar was also hurt by a Chinese trade report that
cast doubts on China's ability to finance the U.S. current
account deficit, which in the long run could weigh on the
dollar [].
Gains in emerging market units such as the Hungarian forint
and Polish zloty versus the dollar also weighed on the U.S.
currency, analysts said.
"Unless we see some improvement in economic indicators we
are just going to bounce around in a wait-and-see mode," said
John McCarthy, director of foreign exchange trading at ING
Capital Markets in New York. "With equity markets bouncing we
could easily trend for a while."
In mid afternoon New York trading, the euro rose 0.7
percent to $1.2764 <EUR=>, after touching a two-week high of
$1.2821 on Tuesday, according to Reuters data. The dollar fell
1 percent against the yen to 97.70 yen <JPY=>.
The euro has lost 8.8 percent against the dollar in 2009,
while the dollar has gained 7.7 percent against the yen.
Investors, however, are now waiting for new impetus from either
corporate news or economic data.
John Crooks, president of research firm Black Swan Capital
in Florida, said he thinks the euro bounce could have some
legs. Apart from any gains in stock prices, he said the euro
was being supported by two other factors: "bond prices under
pressure and oil back in the mid-40s despite no real sign that
global demand has picked up."
Against the Swiss franc, the dollar fell 0.4 percent to
1.1564 francs <CHF=>, while the Australian and New Zealand
dollars rose against the greenback to US$0.6480 <AUD=> and
US$0.5055 <NZD=>, respectively.
Foreign exchange investors received a timely reminder of
the sickly state of global economic growth after data earlier
in the global session showed a slump in China's exports in
February, analysts said. [].
"The dramatic deterioration in China's trade balance
suggests that caution remains recommended and a lasting
reversal in the dollar trend is unlikely," said Commerzbank in
a research note.
"The concern is that maybe China will not be able to
generate massive amounts of foreign exchange capital, which can
then be recycled to U.S. Treasury securities. That is the big
fear factor that hangs over the dollar," said Boris
Schlossberg, GFT's director of FX research in New York.
The pound hit a six-week low against the dollar at $1.3658
<GBP=> but it then recovered to $1.3812, up 0.5 percent on the
day. The euro was up 0.3 percent versus sterling at 92.43 pence
<EURGBP=>.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Leslie Adler)
