* Dollar dips as oil prices jump on Iran, Gulf tropical storm
* Focus on Fed, RBA, BoE and ECB meetings this week
* Aussie edges up but seen vulnerable on rate cut outlook
* Japan margin traders lift kiwi longs to record high
By Eric Burroughs
TOKYO, Aug 4 (Reuters) - The dollar dipped from near a
five-week high against the euro as oil prices jumped above $126 a
barrel, surrendering some of the gains scored last week after
data showed U.S. companies cutting fewer workers than expected.
The U.S. currency has staged a broad recovery as mounting
signs of a broader global economic slowdown have prompted
investors to sell other major currencies where they had seen a
possibility of higher rates.
The Australian dollar has taken a big hit as investors have
been caught off guard by a sharp shift in expectations towards
interest rate cuts, tumbling nearly 3 percent against the dollar
and yen last week for its biggest weekly drop since the Bear
Stearns collapse in March.
Traders said the Aussie likely had more room to fall as
market players come around to the view that the Reserve Bank of
Australia, which holds a policy meeting on Tuesday, could start
cutting interest rates before long.
"Definitely in the Aussie, there are longer-term macro longs
that need to come out," said Gerrard Katz, head of North Asia
currency trading at Standard Chartered in Hong Kong.
Katz said the dollar was also buoyed by investors shifting
funds out of Asian stock markets and into safer assets.
Falling global stocks have prompted market players to trim
carry trade positions in the past few days, although the once
tight link between the performance of stocks and carry trades has
weakened in the past few months.
Japan's Nikkei share average <> fell 1.1 percent.
Wall Street shares retreated on Friday, partly after General
Motors recorded a $15.5 billion quarterly loss and had its credit
ratings downgraded further into junk territory.
This week's events will feature a raft of central bank
meetings including the Federal Reserve and RBA on Tuesday, as
well as the Bank of England and European Central Bank later in
the week.
The euro edged up 0.1 percent from late U.S. trade last week
to $1.5582 <EUR=>, up from a five-week low of $1.5514 struck on
trading platform EBS on Friday.
The dollar lost ground as oil climbed about 1 percent to a
high of $126.35 a barrel <CLc1> after the United States said
world powers have no choice but to increase sanctions on Iran and
a tropical storm formed near oil facilities in the Gulf of
Mexico. []
The dollar was up 0.1 percent at 107.75 yen <JPY=>,
recovering from an initial dip as Japanese investors and currency
traders scooped up higher-yielding currencies.
Analysts have said the dollar could benefit by default as
downgrades to the growth outlook for the euro zone and major
economies hurt other currencies, even as the greenback is dogged
by the shaky U.S. economy and financial system.
"The increased possibility of rate cuts by central banks
other than the Fed could propel a stronger dollar," said currency
strategists at UBS in a note to clients.
Against the yen, the euro rose 0.2 percent to 167.91 yen
<EURJPY=R>.
The Australian dollar was up 0.3 percent at $0.9318 <AUD=D4>,
holding near a three-month low of $0.9285 struck on Friday. The
Aussie gained 0.4 percent to 100.41 yen <AUDJPY=R>, recovering
from a two-month low of 99.78 yen hit earlier in the day.
The Aussie received a reprieve as the second-quarter
Australian house prices reading was not as bad as forecast,
falling 0.3 percent from the previous quarter against
expectations for 1.0 percent drop. []
Money market futures are pricing in a 30 percent chance the
RBA could cut rates by a quarter-point at Tuesday's meeting, even
as most analysts say it is unlikely the central bank will switch
gears on policy so quickly.
A Reuters poll of 21 analysts found none forecasting a rate
cut from 7.25 percent this week. []
Margin traders in Japan, who make leveraged bets on
currencies, have defiantly bought the Aussie and kiwi despite
expectations for interest rate cuts.
Traders on the Tokyo Financial Exchange boosted their net
kiwi long positions to 211,032 on Friday, the highest in records
going back to mid-2006 and roughly doubling in less than two
weeks.
The New Zealand dollar rose 0.3 percent to 78.51 yen
<NZDJPY=R>.
(Additional reporting by Shinichi Saoshiro Editing by Michael
Watson)
