* Dollar slips after Aussie jumps on rate expectations
* Focus also on US earnings after Alcoa beats expectations
* Dollar/yen hovers above 8-month low of 88 yen
* ECB, BoE meetings ahead, euro gains seen limited
By Charlotte Cooper
TOKYO, Oct 8 (Reuters) - The U.S. dollar was on slippery
ground again on Thursday after stronger-than-expected Australian
jobs data boosted the Australian dollar and fuelled general
selling in the greenback.
Australian data beat expectations for a fall in jobs in
September, with 40,600 positions created instead, and the Aussie
jumped to a fresh 14-month high against the U.S. currency as
markets anticipated more rate hikes to come. []
The Aussie's gains fed through to other currencies and the
dollar fell to a 14-month low against the New Zealand dollar and
slid within range of Wednesday's eight-month low at 88.01 yen
<JPY=>.
"Dollar demand is expected down there (at 88.01 yen). But the
weak U.S. dollar is a major story for the market and it's a
matter of time. Dollar/yen is getting gradually lower," said a
senior trader at a European bank.
The prospect of U.S. interest rates remaining low for a while
has undermined the dollar across the board, making it a possible
funding currency for higher-yielding assets and bringing it
within range of January's 13-year low of 87.10 yen.
The U.S. currency slipped 0.4 percent from late New York
levels to 88.30 yen. Traders said there was talk of dollar buying
at Wednesday's low to protect options barriers, with some short
covering when it failed to break that level.
Recent comments from Japanese Finance Minister Hirohisa Fujii
have also encouraged the market not to expect yen selling
intervention at these levels, with Japan's stock market stable
and market volatility not particularly high. However, Fujii
warned on Wednesday that he may act if moves became "abnormal".
[]
The dollar index <.DXY>, a measure of the greenback against
six major currencies, hovered at its lowest in two weeks, not far
off its 2009 low set in September at 75.827.
The Australian dollar <AUD=D4> jumped more than 1 percent on
the day to $0.9035 and bill futures <0#YBA:> slid as the jobs
data prompted the market to price in a real risk of more hikes in
the 3.25 percent cash rate after an increase this week.
On Tuesday, the Reserve Bank of Australia became the first
central bank in the Group of 20 to raise its cash rate in this
cycle. The move led to a general improvement in risk appetite and
made leveraged carry trades even more attractive.
The senior trader at the European bank said the Aussie's
gains would also support yen crosses, helping to slow the
dollar/yen's fall.
"Except Australia, other industralized nations are cautious
about raising rates and their economic data is still mixed," said
Mitsuru Sahara, chief manager at currency derivatives trading at
Bank of Tokyo-Mitsubishi UFJ.
"Once other nations with recovering economic figures such as
Norway start raising rates, the market focus is expected to
return to rate differentials. And investors may reconsider
whether the dollar is an appropriate funding currency," he said.
Although the U.S. is expected to keep rates low for a while,
Japan is seen keeping them low for even longer, which could make
investors think about returning to the yen as a funding currency,
he said.
The Aussie rose 0.8 percent to 79.55 yen <AUDJPY=R>, still
short of its 2009 high at 82.00 yen, while the euro was up 0.1
percent at 130.27 yen <EURJPY=R>.
A surprise profit from Alcoa Inc <AA.N> supported overall
bullishness about a global recovery. []
Wall Street had expected the aluminium producer to post
another loss in the third quarter, heralding a subdued start to
the U.S. earnings season. Dealers said the market was now looking
ahead to U.S. bank earnings next week.
The euro <EUR=> advanced 0.4 percent to $1.4757, not far off
its 2009 peak of $1.4845. The market is waiting to hear from a
European Central Bank meeting later in the day.
The ECB is expected to keep rates unchanged, although its
head, Jean-Claude Trichet, might warn investors against high
hopes of a speedy economic recovery. []. There is
also speculation that he might complain about the euro's
strength.
"We do not expect any fireworks from Trichet, although the
market will remain sensitive to any comments from him regarding
the exchange rate," said Matthew Strauss, a senior currency
strategist at RBC Capital.
Sterling <GBP=D4> climbed 0.2 percent to $1.5994 ahead of a
Bank of England monetary policy committee meeting. Rates are
expected to remain on hold, although markets will be keen to get
some insight on its quantitative easing programme. []
(Additional reporting by Anirban Nag in Sydney, and Satomi
Noguchi and Kaori Kaneko in Tokyo; Editing by Joseph Radford)
