SINGAPORE, May 6 (Reuters) - The U.S. dollar was broadly
weaker on Tuesday as doubts resurfaced about the health of the
U.S. economy while record oil prices lifted commodity
currencies such as the Canadian dollar.
Even the Australian dollar rose as a tentative pick up in
risk appetite boosted high-yielders but it retreated after the
Reserve Bank of Australia kept its cash rate steady and said
aggregate demand in the economy was significantly lower.
The euro rose 0.2 percent against the dollar, struggling to
make headway after Monday's data showing an unexpected
weakening in euro zone investor morale in May and despite ECB
President Jean-Claude Trichet's warning of significant
inflation risks.
Against a basket of six major currencies, the dollar was
hovering at 73.09 <.DXY>, having backed off a 73.698 high on
Friday.
Trade was again thin with Tokyo off on holiday for a second
day, keeping the dollar subdued around 104.80 yen <JPY=> after
failing to sustain a 105.62 high on Monday.
"The dollar is coming under renewed pressure as global risk
appetite appears to be stabilising," said Callum Henderson,
head of currency strategy at Standard Chartered Bank.
"Investors have a lot of cash and are starting to reinvest,
refocusing on nominal interest rate spreads and going for
carry.
"In this environment, the dollar, which rallied on a
positional short squeeze rather than improving fundamentals, is
once again under pressure due to low yields."
At 0530 GMT, the euro bought $1.5520 <EUR=> having recouped
all the losses suffered after Friday's U.S. payrolls report was
not as weak as expected.
Traders said support had been solid in the $1.5340/60 area
and the market seemed to be in a mood to test resistance around
$1.5570.
But the euro retreated from the day's highs near $1.5535
after news of a bigger-than-expected fall in first quarter net
profit at Swiss Re [] and news of a first-quarter
loss for Swiss Bank UBS, which also announced job cuts of
almost 7 percent of its workforce.
OIL SURGES
The dip in the U.S. dollar came despite surprising strength
in the ISM survey of U.S. services, which climbed to 52.0 in
April from 49.6 in March, putting it above the 50 threshold
that separates growth from contraction.
Instead, the market chose to focus on a Federal Reserve
loan officer survey showing a sharp tightening in credit
conditions [] and reports of widespread job cuts
at financial institutions.
The jump in oil <0#CL:> on Monday to a fresh high of
$120.36 was also seen weighing down on the U.S. economy and
helped extinguish a rally in equities <>.
"The ISM data should've helped the U.S. dollar but didn't,
as flows and negative equity sentiment dominated holiday
thinned trade," said Matthew Johnson, a senior economist at
broker ICAP.
In contrast, record highs for oil were seen reinforcing the
European Central Bank's focus on inflation, which Trichet on
Monday termed a "significant" risk.
That merely underlined expectations the central bank would
keep rates at 4 percent when it meets on Thursday.
"The U.S. is going to export inflation no matter what,"
said Johnson. "If U.S. growth is strong, commodity prices will
rise; and if growth is weak, the Fed will cut and real rates
will drop further, and commodity prices will rise further."
Gold and a range of other commodities did indeed climb on
Monday, lifting currencies such as the Australian dollar <AUD=>
which has risen two U.S. cents in as many days to reach
$0.9468.
The Aussie fell to $0.9449 subsequently, after the Reserve
Bank of Australia (RBA) held its key cash rate at a 12-year
high of 7.25 percent and underlined its concern about demand.
(Reporting by Wayne Cole and Vidya Ranganathan; Editing by
Neil Fullick) ((vidya.ranganathan@reuters.com; +65-68703090;
Reuters Messaging: vidya.ranganathan.reuters.com@reuters.net))
Currency bid prices at 0547GMT. All data taken from Reuters
with percent change calculated from the daily U.S. close at
2130GMT.
Last US Close %Chg YTD % 2007 Cls
.
-------------------------------------------------------------
Euro/dlr <EUR=> 1.5518 1.5489 +0.19 +6.37 1.4589
Dlr/yen <JPY=> 104.82 104.80 +0.02 -5.85 111.33
Euro/yen <EURJPY=> 162.68 162.35 +0.20 +0.09 162.53
Dlr/swiss <CHF=> 1.0510 1.0533 -0.22 -7.28 1.1335
Stg/dlr <GBP=> 1.9736 1.9719 +0.09 -0.56 1.9847
Dlr/can <CAD=> 1.0104 1.0132 -0.28 +1.41 0.9964
Aus/dlr <AUD=> 0.9450 0.9466 -0.17 +7.91 0.8757
Euro/swiss <EURCHF=> 1.6312 1.6317 -0.03 -1.37 1.6539
Euro/stg <EURGBP=> 0.7862 0.7854 +0.10 +6.98 0.7349
Nzd/dlr <NZD=> 0.7856 0.7855 +0.01 +2.48 0.7666
Dlr/Norw <NOK=> 5.0630 5.0709 -0.16 -6.84 5.4347
Euro/Norw <EURNOK=> 7.8553 7.8573 -0.03 -0.92 7.9283
Dlr/Swed <SEK=> 6.0308 6.0415 -0.18 -6.68 6.4622
Euro/Swed <EURSEK=> 9.3543 9.3580 -0.04 -0.81 9.4304
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