* Dollar index drops as low as 78.111, lowest this year
* Aussie climbes to 10-mth high and sterling hits 9-mth peak
* Euro reverses gains to 2-month high
* Market awaits a slew of U.S. economic data
By Satomi Noguchi
TOKYO, Aug 3 (Reuters) - The dollar hovered near its lowest
point this year against a basket of currencies on Monday after
higher oil prices, steady global stock markets and U.S. GDP data
boosted investments in riskier assets.
In early Asian trade, the greenback hit its lowest level
since December against the currency basket while the
commodity-linked Australian dollar rose to a 10-month high versus
the dollar, helped partly by oil prices holding firm around $70 a
barrel <CLc1> after jumping nearly 4 percent late last week.
Commodity prices rose on Friday as data showing U.S. gross
domestic product for the second quarter fell at a 1.0 percent
annual rate, below analysts' expectations for a 1.5 percent drop,
raising hopes that fuel demand would recover.
The dollar's slide was driven largely by technical factors
such as stop-loss buying in sterling, which hit its highest level
in nine months, traders said.
But once the dollar's sell-off had run its course, investors
took a wait-and-see approach before a batch of U.S. economic data
due out this week, starting with the Institute for Supply
Management's manufacturing index for July later in the day.
"Ahead of many events this week such as economic data in the
U.S. and earnings from major companies in Europe and Japan,
investors largely stayed on the sidelines," said Yuji Saito, head
of the forex sales department at Societe Generale.
"As long as the market will be able to cope with those
economic events, it will likely keep its risk-taking stance," he
said.
The biggest market focus will be Friday's U.S. job reports as
the U.S. economy appears to be picking up steam even without its
strongest engine -- consumer spending. []
Masafumi Yamamoto, head of FX strategy for Japan at Royal
Bank of Scotland, said the Aussie would rise further against the
dollar and the yen this week if the U.S. data adds to hopes for
an economic recovery.
But Yamamoto also said in his note to clients that further
gains in the euro were hard to see with caution ahead of more
earning reports from European banks this week.
The euro quickly reversed earlier gains to a two-month peak
against the dollar in choppy trade as Japanese exporters sold the
euro to repatriate overseas earnings, traders said.
HSBC <HSBA.L>, Europe's biggest bank, and Barclays <BARC.L>
are scheduled to report half-year results later in the day
followed by Standard Chartered <STAN.L> on Tuesday and Lloyds
Banking Group <LLOY.L> on Wednesday.
Results from major European banks are expected to be buoyant
after a strong recovery in capital markets activity this year,
but losses on mortgages and commercial loans will weigh on the
retail parts of the businesses, analysts predict. []
[]
The dollar index <.DXY>, a gauge of the U.S. currency's
performance against six other major currencies, fell as low as
78.111, the lowest since mid-December, before recovering to trade
at 78.352, near flat from late New York trade on Friday.
The Australian dollar climbed as high as $0.8394 on the
Reuters dealing system, the highest since late September.
Traders said the Aussie was being supported by expectations
that the Reserve Bank of Australia may drop a key reference on
monetary easing at its policy meeting on Tuesday while keeping
the cash rate unchanged at 3 percent.
The euro fell 0.1 percent to $1.4248 <EUR=> after rising as
high as $1.4310 on trading platform EBS, its highest since early
June.
Sterling jumped as high as $1.6780, its highest in nine
months, before stabilising at $1.6730 <GBP=D4>, up 0.1 percent on
the day.
Against the yen, the euro was down 0.2 percent at 134.88 yen
<EURJPY=R> after falling as low as 134.78 on EBS from the day's
high of 135.44 yen. The dollar was also unchanged at 94.75 yen
<JPY=>.
(Additional reporting by Masayuki Kitano, Kaori Kaneko; Editing
by Chris Gallagher)
