* Dollar rises broadly, recouping some of this week's losses
* U.S. currency boosted by Bernanke comments on rates
* Position squaring ahead of US, Japan holidays Monday
* Canada dollar at 1-yr high after stellar jobs data
(Adds comment, updates throughout)
By Naomi Tajitsu and Jamie McGeever
LONDON, Oct 9 (Reuters) - The dollar rose broadly on Friday
after U.S. Federal Reserve Chairman Ben Bernanke made clear he
was thinking of an exit strategy from quantitative easing and
low interest rates as the economy improves.
But its earlier gains were cut sharply by the Canadian
dollar, which rose to a one-year high after data showed the
Canadian economy added six times as many jobs as expected in
September and a surprising fall in the unemployment rate.
After taking a beating for much of the week, the U.S.
currency recovered from a 14-month trough hit against a basket
of currencies on Thursday and pulled further away from an 8
1/2-month low hit against the yen earlier in the week.
Bernanke said late on Thursday that the Fed had the tools
and the ability to withdraw its flood of cash and loans to the
economy -- among the main reasons for the dollar's broad
weakness -- and reiterated that accommodative policies were
likely to be needed for an extended period. [].
Jane Foley, research director at FOREX.com in London, said
Bernanke did little more than state the obvious in that the Fed
would be ready to tighten policy when the economy improves to
prevent the emergence of inflation.
"But the very fact that he is considering the timing of the
first rate hike was enough to excite the market into covering
short dollar positions," Foley said, noting the holidays in the
United States and Japan on Monday.
Even so, "while it is likely that the next Fed move will be
a hike, it is possible that this may not be before the third
quarter next year," she said, adding that the dollar's upside
has been fairly limited so far.
By 1115 GMT the dollar index <.DXY>, which tracks the
greenback against a basket of currencies, was up 0.15 percent to
76.05, above Thursday's 14-month low of 75.767.
The dollar was up <JPY=> 0.3 percent against the yen at
88.70 yen, having earlier climbed as high as 89.42 yen. The
dollar fell as low as 88.01 yen on Wednesday, its weakest since
January.
The euro <EUR=> slipped 0.2 percent to $1.4755, retreating
from a two-week high around $1.4815 hit on Thursday.
European Central Bank President Jean-Claude Trichet said on
Thursday U.S. support for a strong dollar was important and that
excessive currency moves were unwelcome []. His
comments came after the ECB held interest rates at 1.0 percent.
CANADA SURGES
The Canadian dollar jumped to a one-year high after domestic
employment figures showed over 30,000 jobs were created last
month and the unemployment rate fell to 8.4 percent. The U.S.
dollar fell as low as C$1.0438 <CAD=>, a one-year trough.
"The figures may alleviate concerns that Canadian dollar
strength is hurting industrial competitiveness, but the Bank of
Canada will likely stay vigilant on the currency's movements,"
said Geoffrey Yu at UBS.
The Canadian dollar's rally lifted the Australian and New
Zealand dollars closer towards the 14-month peaks touched the
previous day.
The U.S. dollar, meanwhile, has been battered across the
board for much of the year, in part due to speculation that it
may eventually lose its status as the world's top reserve
currency.
While officials from many countries have been stepping up
their rhetoric against excessive currency appreciation in light
of this, analysts said comments from the ECB suggest it may not
be taking a strong a position on the euro at the moment.
"Although Trichet repeated his view that the U.S. support of
a strong dollar is extremely important, he did not signal any
real intensification of concern about the euro's rise," Calyon
strategists said in a client note.
"In fact, were it not for some mildly hawkish comments from
Bernanke later in the day ... we might now be testing the recent
high of $1.4842," they said.
(Reporting by Jamie McGeever; Editing by Ruth Pitchford)
