* Dollar slides broadly, investors shift to risky assets
* Selling pressure continues despite strong ISM
* FOMC minutes, payrolls awaited to gauge dollar direction
(Updates prices)
By Naomi Tajitsu
LONDON, Jan 5 (Reuters) - The dollar slipped across the
board on Tuesday as investors poured fresh funds into riskier
assets at the start of 2010, and as the market awaited Federal
Reserve meeting minutes and U.S. jobs data later in the week.
The U.S. currency reversed gains made versus the euro and
yen last week, unable to capitalise on strong U.S. manufacturing
data released on Monday.
The figures did little to alter the view that U.S. interest
rates will stay low for the next few months, which had kept the
dollar weak for much of last year.
Ahead of Wednesday's release of minutes from the Fed's
policy meeting last month, Fed Governor Elizabeth Duke on Monday
said rates needed to be kept "exceptionally low" for an
"extended period". []
Analysts said the minutes, along with U.S. payrolls due on
Friday, would help determine the dollar's near-term direction.
"A lot is going to hinge on the FOMC minutes and the
payrolls," said Geoffrey Yu, currency strategist at UBS in
London."People want to square positions ahead of Friday, while
taking a marginally risk-positive view," he said.
Increases in risk appetite have also been a drag on the
dollar, eroding the currency's safe-haven appeal in favour of
higher-yielding currencies as investors get more optimistic on
the world economic outlook.
By 1255 GMT, the euro <EUR=> was up 0.2 percent at $1.4440,
having climbed to around $1.4480 earlier in the day to hit its
strongest in nearly three weeks.
The dollar did trim some of the losses as European shares
spent much of the early session in negative territory, but
higher oil and gold prices suggested risk appetite was broadly
buoyant as fund managers rebuild portfolios in the new year.
FACTORY GROWTH
The dollar actually fell further on Monday when data showed
U.S. factories marked their best month in nearly four years
[], something some analysts said may bode ill going
forward.
"The ISM data showed that not all positive macroeconomic
data is positive for the dollar," said Sven Schubert, currency
analyst at Credit Suisse in Zurich. "This could be seen as a
sign we are still in a phase of dollar weakness."
The dollar <JPY=> also fell 0.6 percent to 92.00 yen, on
track for its biggest one-day percentage loss in a month.
The dollar index <.DXY>, which tracks its performance
against a basket of currencies, slipped 0.1 percent on the day.
The Australian and New Zealand dollars each rose around 0.5
percent against the greenback, while the Canadian dollar reached
a 2 1/2-month high of $1.0336.
The Swiss franc was little changed around 1.4850 per euro
<EURCHF=D4>, after hitting a 10-month high of 1.4834 on Monday.
A fall below 1.48 triggered the Swiss National Bank's foray
into the currency market in March 2009, and many in the market
suspect it may step in around that level to stem further
strength, keeping it hovering in that vicinity.
DOLLAR POSITIONS
The dollar rose in the last days of 2009 as signs of an
improving U.S. economy prompted some to believe the Federal
Reserve could start to tighten monetary policy in 2010.
Its year-end gains were reflected in the latest data from
the Commodity Futures Trading Commission released on Monday,
which showed an increase in long dollar positions for a second
straight week to Dec. 29. []
Some analysts said the long positioning merely suggested
shorts had been closed out, and did not necessarily indicate the
dollar would post more significant gains in the near term.
Data showing a euro zone inflation rose 0.9 percent
year-on-year in December had little impact on the market, which
awaited upcoming figures on U.S. factory orders and home sales
to gauge whether the U.S. economy was continuing to improve.
Friday's payrolls are seen offering more direction for the
dollar. The median forecast of analysts polled by Reuters is for
a decline of 8,000. []
(Editing by Patrick Graham)
