* Dollar off deepest of week's lows but vulnerable
* Aussie slips after weaker-than-expected jobs data
* Aussie and kiwi face profit-taking after recent rally
By Kaori Kaneko
TOKYO, Sept 10 (Reuters) - The dollar hovered near its 2009
lows on Thursday as firm shares and commodity prices helped
investor sentiment, while higher-yielding currencies eased on
profit-taking after their recent rallies.
Investors booked gains in the Australian and New Zealand
dollars, driving them down from this week's one-year highs, but
the greenback remained in sight of key levels against the yen at
91.50 yen and a chart target around $1.4620 per euro.
The dollar index <.DXY>, which tracks its performance against
a basket of six major currencies, edged down 0.2 percent to
76.927. The index dipped to 76.803 on Wednesday, its lowest level
in almost a year.
The low-yielding dollar has suffered as investors have bet on
economic recovery through commodity-linked and higher yielding
currencies, and analysts said there was a growing possibility it
would replace the yen as a funding currency for riskier leveraged
carry trades.
"Speculators and hedge funds seem to be playing a major role
in the dollar's weakness," said a trader at a Japanese bank.
"But it is probably too early to say the dollar has replaced
the yen as a funding currency for carry trades, and more time is
needed to see how far the dollar's broad weakness will progress."
With official rates in both Japan and the U.S. close to zero,
interbank rates have also been falling. The three-month dollar
London interbank offered rate, Libor, was at 0.299 percent
<USD3MFSR=> on Wednesday, lower than the three-month yen Libor
rate of 0.37 percent <JPY3MFSR=>.
The dollar held steady on the day at 92.04 yen <JPY=>, up
from Wednesday's seven-month low of 91.61 yen on trading platform
EBS after short-term players covered short positions.
Traders say options triggers are expected at 91.50 yen, and
options desks have been buying dollars in option-related hedging,
preventing it from falling further.
They also expect Japanese importers will be dollar buyers at
these kind of levels but as September is the end of the fiscal
first half the market is waiting to see whether inflows of
capital into Japan will pick up.
Others said Japanese exporters were not moving to sell the
dollar for now as its slide remained gradual, but it was likely
they would lower their selling orders, currently mostly above
93.50 yen, towards the end of the fiscal half year this month.
The euro <EUR=> inched up 0.1 percent to $1.4575, holding on
to a 0.5 percent gain made on Wednesday when it hit a 2009 high
above $1.4600. It has a key chart level at $1.4620, which is a
61.8 percent retracement of its fall from July 2008 to October
last year.
The New Zealand dollar <NZD=D4> eased 0.1 percent to $0.6975,
dropping from just below Wednesday's one-year high above $0.7000
after the Reserve Bank of New Zealand (RBNZ) governor said it was
overvalued and after weaker-than-expected Australian jobs data.
[]
Earlier the RBNZ left rates on hold at a record low of 2.5
percent as expected but indicated it was less inclined to cut
rates again. []
Su-Lin Ong, a senior economist at RBC Capital, said the
central bank was likely to keep rates low for most of the next 12
months.
But given its reliance on offshore financing, New Zealand may
have to follow in Australia's footsteps in 2010 and raise
rates, she said.
The Australian dollar fell after data showed Australia's
employment dropped by 27,100 jobs in August, more than double a
Reuters forecast of 12,500, although the jobless rate held steady
at 5.8 percent, better than the 5.9 percent forecast. <ECONAU>
Speculation has been high that Australia will raise rates
before the end of the year. But implied rates <CSRBA=CSAU>, based
on money market and swap rates, cut the chance of an October hike
to 16 percent from around 30 percent before the jobs report. Even
the prospect of a November hike dimmed to around 50 percent.
<RBAWATCH>
The Aussie slipped 0.3 percent to $0.8604 <AUD=D4>,
retreating from Wednesday's one-year high of $0.8669.
Later in the day, the Bank of England concludes a two-day
monetary policy meeting and is widely expected to keep rates
unchanged. Still, there is an outside chance it might decide to
expand its quantitative easing programme.
The pound was steady at $1.6554 <GBP=D4> after touching a
three-week high on Wednesday, and was unchanged at 88.06 pence
per euro <EURGBP=D4>.
Also, the Bank of Canada meets and is expected to keep its
conditional commitment to maintaining rates at 0.25 percent.
(Additional reporting by Anirban Nag in Sydney, Satomi Noguchi
in Tokyo; Editing by Joseph Radford)
