* Euro firm after breaking above Fibonacci retracement
* Aussie falls on disappointing data; trims losses after RBA
* Dollar/yen capped by Japan exporter selling
By Hideyuki Sano
TOKYO, Aug 3 (Reuters) - The dollar hovered near a
three-month low against a basket of currencies on Tuesday on the
perception that the U.S. growth outlook is deteriorating, forcing
the Federal Reserve to keep interest rates low.
The Australian dollar dropped after retail sales and building
approvals data in Australia disappointed bulls. []
But the Aussie trimmed losses after the Reserve Bank of
Australia's post-meeting statement contained no negative
surprises, prompting players to cover short positions in the
currency.
The RBA kept its benchmark interest rate steady at 4.5
percent, as widely expected, and said policy was appropriate
given past rate raises, moderating inflation and some uncertainty
about the global outlook. []
The Australian dollar was down 0.1 percent at $0.9115
<AUD=D4>, off the day's low of $0.9090 hit after the data. It
struck a three-month peak of $0.9146 on Monday. Against the yen,
it slipped 0.3 percent to 78.77 yen <AUDJPY=R>.
The euro stayed near a three-month high after having broken
above a key Fibonacci retracement level, helped by improved risk
appetite after decent manufacturing data from Europe.
The euro slipped 0.1 percent to $1.3165, but was near the
three-month high of $1.3196 hit on Monday, when stop-loss orders
were triggered after it broke above $1.3125, a 38.2 percent
Fibonacci retracement of its decline from November to June.
The currency's advance could be slowed by option barriers at
$1.32 and $1.3250, although a break through those levels could
open the way for it to reclaim $1.3510, a 50 percent retracement
of its six-month fall to early June.
Against the yen, the euro slipped 0.2 percent to 113.82 yen
<EURJPY=R>.
Investors' rising risk appetite could push up the pair beyond
the 10-week peak of 114.74 yen hit last week, although there will
be a resistance at 115 yen, where Japanese exporters are likely
to place fresh sell orders, said a trader at a Japanese brokerage
house.
The dollar index <.DXY> stood at 80.96, flat from late Monday
but just above Monday's three-month low of 80.792.
A break below 80.723 would put it below its 200-day moving
average for the first time since January and on course to test an
April 14 low of 80.03.
The greenback has slid over the past month after a run of
disappointing U.S. data fuelled expectations that U.S. growth
could lose momentum as official stimulus is withdrawn.
The dollar slipped 0.1 percent against the Japanese yen to
86.46 yen <JPY=>, not far from an eight-month low of 85.95 yen
hit late last week.
JAPAN EXPORTERS
"With interest rate differentials between the yen and dollar
disappearing, dollar/yen is tending to be driven by Japanese
exporters' flows, as we've seen in the past few sessions," said
Daisuke Karakama, a market economist at Mizuho Corporate Bank.
Japanese exporters have been selling the dollar as their
summer holiday season approaches in mid-August.
Traders said exporters have been lowering the levels at which
they are willing to sell the dollar on views that weakness in the
greenback is likely to persist, with offers seen waiting above 87
yen. That level is below many major Japanese firms' dollar/yen
assumption rates of around 90 yen for the year to March 2011.
"Japanese exporters are clearly losing their patience," said
Jun Kato, senior manager of the investment department at Shinkin
Asset Management. "Many are now deeply concerned the dollar could
fall below 85 yen."
Mizuho's Karakama noted that, while U.S. shares rose and
long-dated U.S. bonds fell, the two-year U.S. bond yield showed
only a marginal increase on Monday, suggesting limited upside for
the dollar.
The two-year yield spread between Japanese and U.S. bonds has
had a correlation of over 80 percent most of the time so far this
year.
U.S. bond yields dipped in Asia, putting mild pressure on the
dollar, after the Wall Street Journal reported the U.S. Federal
Reserve will consider next week whether to use cash from its
maturing mortgage bond holdings to buy new mortgage or Treasury
bonds. []
A break below the November low of 84.82 yen in the dollar/yen
could trigger more market talk about Japanese intervention,
though few market players expect the country's authorities to
step in for now. []
(Additional reporting by Rika Otsuka; Editing by Chris
Gallagher)
