* Japanese investors, model players take profits in euro
* Swiss franc near record high vs dollar, firm vs euro
* Aussie hurt by profit-taking, lower China growth target
By Hideyuki Sano
TOKYO, Feb 28 (Reuters) - The dollar found a steadier
footing on Monday as market players covered short positions ahead
of a series of important events this week that could drastically
change its recent range-bound trend.
The Swiss franc remained firm, however, both against the
dollar and the euro, as ongoing tensions in Libya and fears of
contagion kept its safe-haven attraction intact.
The dollar index, which tracks the greenback's performance
against a basket of major currencies, was little changed at
77.193 <.DXY>, off a three-week low of 76.945 plumbed last week.
A break below 76.881 would have the index back at lows not seen
since early November.
The dollar slipped 0.2 percent against the Swiss franc to
0.9267 francs <CHF=>, edging closer to a record low of 0.9229 hit
on EBS last week.
The euro also slipped 0.2 percent, to 1.2750 francs
<EURCHF=R>, down slightly from 1.2763 late in New York on Friday.
Key support is seen at 1.2705 francs, a level representing a
61.8 percent retracement of the euro's December to February
rally.
Against the greenback, the euro slipped as Japanese investors
and model players sold the currency, thinking the currency is
unlikely to have the momentum to break above major resistance
before a series of events.
This week will see testimony from Federal Reserve Chairman
Ben Bernanke, a European Central Bank policy meeting and U.S.
jobs data, which could set the tone of the market in coming
weeks.
"I suspect we will be in for a rollercoaster ride this week
given heavy schedules. But the dollar could end higher than it is
now at the end of the week, if things point to a recovery in the
U.S. economy," said Sumino Kamei, senior analyst at the Bank of
Tokyo-Mitsubishi UFJ.
The euro was susceptible to profit-taking as the latest data
showed currency speculators had boosted bets in favour of the
euro to the highest since October in the week ended Feb. 22.
The euro slipped 0.1 percent to $1.3743 <EUR=>, falling
further from a three-week high of $1.3837 marked on Friday, as
bulls abandoned hope of it trying its Feb. 2 high of $1.3862 in
the near future.
While expectations that the European Central Bank may signal
its willingness to raise rates at its meeting on Thursday have
been supporting the euro, some traders say there is scope for
disappointment.
"I wonder if they would really raise interest rates when some
countries in the currency bloc are still having troubles in
accessing liquidity," said a trader at a Japanese brokerage.
IRELAND CHANGE
There was little reaction to news that Ireland's main
opposition party claimed a historic election victory, after the
government was routed at the polls.
Some analysts cautioned that the new government could cause a
ripple in coming weeks as it seeks to renegotiate the terms of a
bailout scheme, although the majority of market players see
limited chance Dublin will take measures that could shock
investors, such as forcing losses on senior bank bonds.
"If the incoming government is to obtain concessions on
reducing the interest rate charged and extensions of the
repayment maturity of the loans, it is unlikely that there will
be much room to negotiate on haircuts on senior bank debt," said
Takuji Okubo, chief economist at Societe Generale.
The dollar has been hit hard by rising oil prices as
investors fret the U.S. economy will suffer more than others,
given its strong reliance on consumer spending for growth.
It hardly moved against the yen at 81.65 <JPY=>, near the
lower end of its 81-84 yen band this year, after having failed
miserably to clear resistance around 84.00 earlier this month.
The Australian dollar recovered much of its earlier losses to
trade at $1.0172 <AUD=D4>.
Earlier, the currency was hit by comments by Chinese Premier
Wen Jiabao at the weekend that the country's official GDP target
for 2011-2015 growth plan is 7 percent per year.
That is significantly below the average annual 11.2 percent
growth in the last five-year period, although official targets
tend to undershoot actual performance.
But the currency held comfortably above $1.01 ahead of a slew
of economic data including the fourth quarter gross domestic
product report on Wednesday.
This week's data is not expected to change market views that
the Reserve Bank of Australia will keep rates on hold for the time
being. Analysts polled by Reuters on Friday expect the RBA to
resume hiking interest rates gradually from the second quarter
onwards.
No one seriously expects the RBA to hike rates at this
week's policy meeting given RBA governor Glenn Stevens recently
said the central bank was ahead of the policy game and market
pricing of no rate hike until later in the year was reasonable.
"The plethora of recent communications leaves the
impression that while retaining a positive outlook, the RBA is
comfortable with current financial conditions," said David Watt,
strategist at RBC Dominion Securities.
"As so much has been said of late, the statement could be
rather brief. We continue to anticipate 50bp of rate hikes by
year end."
(Additional reporting by Ian Chua in Sydney, Masayuki Kitano in
Singapore, Reuters FX analysts Krishna Kumar in Sydney and Rick
Lloyd in Singapore; Editing by Joseph Radford and Chris
Gallagher)
