* Euro recovers vs dollar, snapping four-day decline
* Dollar rises vs yen on U.S. ISM manufacturing data
* Dollar index close to 6-month high
(Recasts, updates prices)
NEW YORK, Feb 1 (Reuters) - The dollar rallied against the
yen on Monday after data showed U.S. manufacturing grew faster
rate than expected in January, increasing risk tolerance.
For details on the ISM report see [].
A stronger-than-expected euro zone purchasing managers
index report pushed the euro higher, snapping four straight
days of declines, but it is still near around seven-month lows
on concerns over the debt of some euro zone countries.
U.S. President Barack Obama's budget projected a record
deficit in 2010, but traders said it had little currency
impact. []
"This is a dollar-positive report," said Vassili
Serebriakov, currency strategist at Wells Fargo in New York.
"Especially looking at dollar/yen, which has been more
sensitive to U.S. economic data in the sense that better U.S.
numbers are good for the dollar against the yen."
In New York trade, the dollar was up 0.6 percent against
the yen <JPY=> at 90.86 yen, near the session peak of 90.88.
The euro traded up 0.3 percent at $1.3906 <EUR=>, not so
far from an earlier low of $1.3854, according to Reuters data,
its weakest since early July.
Traders said the next downside level to watch was $1.3850,
where a large option barrier was said to reside.
"The euro snapped four days of declines against the dollar
on increased demand for risk as investors bet the global
economic recovery is gaining momentum," said Andrew Bekoff,
chief investment officer for Family Office Group in New York.
Analysts said the euro remained the most vulnerable
currency as concern persisted about the debt levels of Greece
and Portugal.
EU Economic and Monetary Affairs Commissioner Joaquin
Almunia said in a Reuters interview Greece's fiscal cutback
plans were "ambitious but achievable." []
Above-forecast final euro zone PMI data was the big boost
on the day to the euro zone single currency. []
POSITIONING
The latest data from the Commodity Futures Trading
Commission showed speculators increasing bets against the euro
in the week to Jan. 26 and going long on the U.S. dollar to
reverse a net short position the previous week. []
For a graphic comparing IMM positioning and the euro/dollar
exchange rate, click on:
http://graphics.thomsonreuters.com/0210/EZ_ERCFTC0210.gif
"The latest IMM data showed euro-dollar shorts were perhaps
overextended, with this morning's PMI number providing an
excuse for some short-covering, though overall the euro still
looks vulnerable," said Mark Oswald, FX and rates strategist at
Monument Securities in London.
The dollar index, a calculated measure of the greenback's
performance against six other major currencies, was down 0.1
percent at 79.355, off an earlier high of 79.534 <.DXY>, its
strongest since late July.
In earlier trade, the Australian dollar fell to its lowest
since mid-December versus the dollar and the yen as investors
unwound yen-funded carry trades on a newspaper report citing
Adair Turner, chairman of Britain's Financial Services
Authority, saying such trades were "economically valueless."
[]
Turner was speaking after a private session on casino
banking and regulation at the World Economic Forum in Davos.
The Australian dollar <AUD=> was last at US$0.8867 and at
80.54 yen <AUDJPY=R>.
The Reserve Bank of Australia is expected to raise interest
rates by 25 basis points on Tuesday. A Reuters poll showed all
20 economists surveyed predicting a hike []. Markets
price in a 69 percent perceived chance of an increase.
(Reporting by Nick Olivari; Additional reporting by Wanfeng
Zhou; Editing by James Dalgleish)
