* Dollar index hits lowest since early June on JPM results
* Euro, stg hit day's high vs dlr strong JPM performance
* Yen trims gains as risk demand picks up
(Reledes, updates throughout, changes byline)
By Naomi Tajitsu
LONDON, July 16 (Reuters) - The dollar hit a five-week low
against a currency basket on Thursday after strong earnings from
JPMorgan tarnished the U.S. currency's safe-haven appeal and
stoked some demand for currencies seen to be high-risk.
JPMorgan Chase <JPM.N> reported a net earnings per share of
$0.28 in the second quarter of 2009, much more than expectations
of around $0.05. It said that strength in its core consumer and
investment banking businesses offset a jump in credit losses
[].
After spending much of the day down against the dollar, the
euro and sterling hit the day's highs, prodding the dollar index
to 79.204, its lowest since June 11, as JPMorgan's performance
suggested it is recovering from the financial crisis.
"Traders and investors are buying pro-risk currencies like
sterling and are selling yen after Q2 earnings from JP Morgan,"
said Neil Jones, head of hedge fund FX sales at Mizuho in
London.
"The market is responding."
The euro <EUR=> climbed as high as $1.4152 according to
Reuters data, recovering from the day's low of $1.4056. By 1140
GMT, it was at $1.4133, up 0.2 percent on the day.
Some market participants said that trade may become choppy
ahead of options expiries in the pair later in the day. IFR
reported that 200 million euros' worth of options with a $1.41
strike price were due to expire at the New York cut.
The dollar index was at 79.255, down slightly on the day.
Sterling <GBP=D4> rose as much as around 0.3 percent on the
day to $1.6462 after the JPMorgan announcement, before pulling
back to $1.6445.
The dollar <JPY=>, but was down half a percent at 93.79 yen,
but stayed off the day's low of 93.53 yen.
The yen trimmed gains against higher-risk currencies
including the euro and sterling, although those currencies
remained down on the day after risk-averse traders had picked up
the Japanese currency earlier in the day.
"There are only two trades in FX markets at the moment -
risk on and risk off," said Maurice Pomery, managing director at
Strategic Alpha.
CITI, BOA NEXT
JPMorgan's strong performance comes on the heels of stellar
earnings from Goldman Sachs <GS.N> earlier in the week, which
has helped to cool some risk aversion.
Citigroup <C.N>, General Electric <GE.N> and Bank of America
<BAC.N> are due to announce their earnings on Friday.
Market participants were uncertain whether the two banks
would fare as well as Goldman and JPMorgan did in April-June,
and some said that weakness in any of these results may dent
hopes for a global economic recovery, limiting demand for risk.
Analysts added that some traders took news of bailout talks
ending between the U.S. government and CIT Group <CIT.N>, a
major lender to small and mid-sized U.S. firms [],
as an excuse to take profits on those recent gains.
The New Zealand dollar <NZD=D4>, which is often considered
high-risk, slid 0.5 percent to $0.6455 and fell more than 1
percent against the yen <NZDJPY=R>, stung after Fitch ratings
agency earlier in the day downgraded New Zealand's sovereign
outlook to negative [].
The Australian dollar fell in sympathy, sliding 0.3 percent
against its U.S. counterpart <AUD=D4> and 0.5 percent against
the yen <AUDJPY=>.
(Additional reporting by Jessica Mortimer; Editing by Victoria
Main)
