* Dollar slips, upward momentum loses traction
* Euro/dollar recovers losses, but stays below 14-mth high
* Analysts expect currency consolidation before U.S. data
(Updates prices)
By Naomi Tajitsu
LONDON, Oct 27 (Reuters) - The dollar slipped against the
euro on Tuesday as traders took a breather from steep gains made
in the U.S. currency the previous day which had knocked the euro
from a 14-month high.
With few major economic data and events in the European
session, the dollar hovered in narrow ranges in quiet trade.
Some in the market said a rise in U.S. government bond yields
helped to boost the dollar on Monday.
Analysts said the market was aware short positions in the
dollar have piled up in past weeks, signalling the possibility
of a rebound in the U.S. currency. []
Still, they added that the trigger for such a turnaround had
yet to materialise.
"We've had a good, long run in dollar weakness so the market
needs to take profits," said Peter Frank, currency strategist at
Societe Generale in London.
"The market is positioned for a dollar bounce-back but we
need a catalyst for that ... We didn't see one on Monday."
Analysts said the market's voracious appetite for risk seen
in past months -- which has battered the dollar across the board
-- may be cooling down, and that traders may be waiting for U.S.
third-quarter economic growth figures later in the week to
determine the currency's direction in the near term.
By 1200 GMT, the euro was up 0.1 percent on the day at
$1.4873, but remained well below $1.5064 hit on Monday, its
highest since August 2008.
The euro stumbled nearly a full percent against the dollar
on Monday, and some analysts said the euro's retreat from its
14-month peak had been driven by the single currency's inability
to sustain its rally above the psychologically key $1.50 region.
The euro remained on the back foot as European banking
shares came under selling pressure after news that Dutch
financial institution ING will be split in two and launch a
rights issue to repay some state aid. []
The dollar <JPY=> fell 0.2 percent to 91.98 yen, retreating
from a one-month high of 92.33 yen <JPY=> hit in earlier trade.
The dollar index <.DXY>, a measure of its performance
against six other major currencies, fell 0.2 percent to 75.940,
but stayed above a 14-month low of 74.94 hit last week.
The high-yielding Australian dollar <AUD=D4> inched up
around 0.2 percent against its U.S. counterpart.
Data was thin on the ground on Tuesday but market
participants were awaiting the S&P Case/Shiller home price index
for August due at 1300 GMT and the Conference Board's report on
consumer confidence for October at 1400 GMT. <ECONUS>
NORWAY RATE DECISION AHEAD
The Norwegian crown hovered near a one-week low against the
euro, as traders trimmed some long positions in the Nordic
currency before the Norges Bank is expected to raise interest
rates on Wednesday. []
Analysts said the crown may resume its broad rally if the
Norges emphasises improving fundamentals and increasing
inflation risks as reasons for hiking rates.
The dollar's rally on Monday was helped by a rise in the
10-year Treasury yield on speculation the Federal Reserve may
signal a tightening in monetary policy down the road, while the
market also fretted about a record debt sale this week.
The 10-year Treasury yield <US10YT=RR> rose as high as
around 3.58 percent, its highest since late August, and expanded
the U.S./euro zone government debt yield spread to its widest in
two months, raising some appeal of dollar-denominated assets.
But dollar gains quickly sputtered as the rise in yields
lost some momentum.
"... even at these levels, yields aren't high enough for a
sustained dollar rally," said Marcus Hettinger, global currency
strategist at Credit Suisse in Zurich.
(Editing by Victoria Main)
