* Euro hits 2-mth high vs dlr, trims gains
* Aussie jumps vs yen, dlr after jobs data beats forecasts
* Investors await Trichet comments, ECB holds rates
(Adds quotes, prices)
By Lin Noueihed
LONDON, July 8 (Reuters) - The euro hit a two-month high
against the dollar on Thursday after strong Australian jobs data
boosted higher-risk currencies, while investors awaited European
Central Bank comments on bank stress tests and money markets.
A jump in Australian employment in June drove the Australian
dollar up more than 1 percent on the day against the dollar and
nearly 2 percent higher against the yen. []
Markets awaited comments by ECB President Jean-Claude
Trichet for clues on whether upcoming stress tests will
effectively gauge the health of European banks. []
Investors also want to see whether the ECB is happy with a
recent rise in money market rates or may seek to increase
liquidity, possibly via tenders with longer maturities.
Trichet will speak at 1230 GMT, after the European Central
Bank earlier kept interest rates at a record low 1.0 percent at
its monthly meeting.
"The euro is on a reasonably good uptrend. If Trichet sounds
a bit more optimistic today on money markets and bank stress
tests we will see that uptrend continue," Daragh Maher, deputy
head of foreign exchange research at Credit Agricole, said.
"Markets seem comfortable we will get reasonably testing
assumptions in the tests but Trichet will avoid addressing the
issue directly. He will say wait for the results."
The euro <EUR=> climbed to $1.2688 in Asia, its highest
since mid-May, before trimming gains to $1.2650 at 1151 GMT. It
barely moved after the ECB's rate announcement.
It hovered in a tight range in Europe, chained down by
options set to expire later in the day at $1.2650 and $1.2655.
The Aussie was 1.4 percent higher versus the yen at 76.84
yen <AUDJPY=R>, after hitting 77.48 yen, its highest in more
than a week, on the back of data showing Australia created
45,900 jobs in June, much higher than forecasts for 17,500.
It rose around 1.2 percent on the day against the dollar to
$0.8762 <AUD=D4>, touching its highest in almost two weeks.
The yen was one of the day's biggest losers as a 0.7 percent
rise in European shares stoked risk demand, prompting investors
to shed long positions in the low-yielding currency.
The dollar <JPY=> rose 0.7 percent to a one-week high of
88.46 yen, while the euro rose 0.5 percent against the Japanese
currency.
Sterling <GBP=D4> slipped 0.3 percent to $1.5135, pulling
away from a two-month high of $1.5241 after an early rally
triggered an unwinding of some long positions.
It barely moved after the Bank of England kept interest
rates unchanged at a record low 0.5 percent, as widely expected.
Against a basket of six major currencies <.DXY>, the dollar
hit a fresh two-month low of 83.707 before recovering to 83.941.
FURTHER EURO CORRECTION?
The euro has rallied on short covering after hitting a
four-year low of $1.1876 in early June, but analysts were not
convinced it has snapped its downward trend.
"The euro correction is lasting longer than most investors
were expecting, but it hasn't reached a point where anyone
believes a new upward trend has started," said Audrey
Childe-Freeman, currency strategist at Brown Brothers Harriman.
She added that a disappointing run of U.S. data, including
dismal payrolls last week, was prolonging the corrective phase
as markets have shifted their negative focus to fundamental
weakness in the United States, from euro zone debt worries.
While Childe-Freeman expected economic data from Australia
and China next week may further boost risk demand and support
the euro, she added that any signs of weakness in the euro zone
-- fundamental or fiscal -- may put the brakes on its rally.
Resistance at the May 21 high of $1.2673 was proving hard to
break cleanly while further resistance was seen at $1.2767-80.
That is where downtrend resistance emerges as a line
connecting highs hit in December 2009 and April. It is also a 50
percent retracement of the euro's fall from mid-April to June.
(Additional reporting by Naomi Tajitsu; Editing by Nigel
Stephenson and Susan Fenton)
