* Dollar steady vs euro, comes off lows as U.S. yields spike
* Swiss franc near record high; commodity currencies firm
* Dollar slips vs yen in thin trade
(Adds detail, updates prices)
By Jessica Mortimer
LONDON, Dec 29 (Reuters) - The dollar steadied against the
euro on Wednesday as a spike in U.S. Treasury yields helped it
recover from losses the previous day, while gains in commodity
prices buoyed the likes of the Australian and Canadian dollars.
The market remained very thin, however, and susceptible to
exaggerated moves after a yo-yo session the previous day which
was marked by year-end flows and saw the dollar fall sharply
against a range of currencies.
The turnaround came as U.S. Treasury yields rose across the
board, with the benchmark 10-year issue gaining 16 basis points
to just shy of 3.50 percent after a poor auction of five-year
bonds. []
The auction also served as a reminder of fiscal problems
facing the United States. Coupled with concerns about a debt
crisis in the euro zone, this buoyed the yen and kept the Swiss
franc near record highs versus the dollar and euro as investors
sought safety.
The dollar index, which tracks the greenback's performance
against a basket of currencies, was flat on the day at 80.319
<.DXY>, holding above Tuesday's low of 79.596.
Weak U.S. consumer confidence and home price data on
Tuesday, pointing to a fragile economy, [] weighed
on the dollar and tempered its recovery.
"Cheaper U.S. Treasury prices make them more attractive but
only to a point, and there could come a point when investors
don't want to buy them any more," said Neil Mellor, currency
strategist at Bank of New York Mellon.
He added that the greenback was soft against the yen as
Japanese exporters have been selling on concerns about a
weakening dollar, as well as against commodity-linked
currencies, though he cautioned against reading too much into
moves in such an illiquid market.
Investors will watch for a sale of seven-year U.S. debt on
Wednesday.
The euro was steady on the day at $1.3118 <EUR=> after a
whipsaw move on Tuesday that took it to $1.3275, its strongest
since Dec. 17. It held above support at its 200-day moving
average, now at $1.3084, and last week's low just above $1.3050.
Sovereign offers were reported above $1.3150.
SWISS FRANC, AUSSIE SHINE
The euro traded at 1.2475 Swiss francs <EURCHF=>, barely
above a record low of 1.2440 francs set a week ago as investors
sought refuge from debt problems that have dogged the euro.
The franc also held not far from a record high against the
dollar. The U.S. currency traded slightly weaker at $0.9500
<CHF=> after hitting an all-time low around $0.9437 on Tuesday.
"The Swiss franc is well supported by fundamentals, risk
aversion and by people diversifying out of euros," said Niels
Christensen, currency strategist at Nordea in Copenhagen.
The yen, seen as another safe haven, was also supported by
risk aversion after hitting a six-week high against the dollar
and a near two-year high against sterling on Tuesday.
The dollar slipped 0.3 percent to 82.18 yen <JPY=>, close to
Tuesday's low of 81.81, with traders citing stop loss orders
below 81.75. Technical analysts highlighted a bearish signal as
the dollar traded below the bottom of its daily Ichimoku cloud,
a closely watched Japanese technical indicator, at 82.39.
Commodity-linked currencies were firm as commodity prices
stayed close to recent highs, shrugging off concerns that
China's economy could slow after its central bank raised
interest rates on Saturday [] as London Metal
Exchange copper hit a record high. []
The Australian dollar <AUD=D4> rose 0.2 percent to $1.0118,
not far off a 28-year peak of $1.0182 set in November. It rose
as high as $1.0153 on Tuesday. Traders cited talk of sovereigns
switching out of euros into other currencies, including the
Australian dollar, while real-money accounts were reportedly
adding to existing Aussie long positions.
The dollar slipped 0.3 percent versus the Canadian dollar to
C$0.9982 <CAD=D4>, not far from C$0.9931 hit in April, a break
of which could push it to a level not seen for 2-1/2 years.
(Additional reporting by Neal Armstrong; Editing by Ron
Askew)
