* Market focus on U.S. Q2 GDP at end of week
* Bernanke: H2 growth won't be enough to bring down jobless
* Nikkei at 9-mth high on hopes for Japan corporate earnings
By Charlotte Cooper
TOKYO, July 27 (Reuters) - The euro and commodity-linked
currencies rose on Monday, underpinned by gains in stocks and oil
prices, but currency moves were modest as the market kept to
recent ranges ahead of U.S. GDP data due later in the week.
Federal Reserve Chairman Ben Bernanke reaffirmed his view of
an improving but still vulnerable U.S. economy, saying the
jobless rate was likely to stay high even when the economy exited
recession sometime in the next few months. []
The market took Bernanke's comments in its stride with
investors also waiting to see how U.S. Treasury debt auctions go
this week as well as talks between Washington and Beijing.
"After the market has priced in stronger-than-expected U.S.
corporate earnings so far, investors await new incentives. Those
could be the outcome from the U.S. and China dialogue and
Treasury auctions this week," said a trader at a Japanese bank.
Top U.S. and Chinese officials hold talks in Washington on
Monday and Tuesday on a broad range of economic, security,
diplomatic, energy and environmental issues. []
The U.S., which ran a record $266 billion trade deficit with
China in 2008, is seeking ways to rebalance trade, including
persuading the Chinese to liberalise exchange rates so that the
yuan appreciates to trim Chinese exports and boost imports.
"Any remarks from China related to its stance on its U.S.
Treasury holdings and the dollar's role is a focus," the trader
said.
The euro rose 0.2 percent to $1.4234 <EUR=>, not far off a
seven-week high of $1.4292 set last week or its 2009 peak of
$1.4339 hit in early June. It also edged up 0.1 percent to 135.00
yen <EURJPY=R>.
The Australian dollar climbed 0.4 percent to $0.8206
<AUD=D4>, also not far off last week's six-week high of $0.8223
or its peak for the year of $0.8265. Against the yen, it rose 0.3
percent to 77.79 yen <AUDJPY=R>.
The currency market was keeping an eye on share markets and
oil as gauges of investor optimism about economic recovery.
Tokyo's Nikkei share average <> hit a nine-month high and
oil prices rose towards $69 a barrel on Monday.
The dollar index <.DXY>, a measure of its performance against
six major currencies, slipped back towards a seven-week low
forged last week, but the greenback was steady on the day against
the yen at 94.85 yen <JPY=>.
Data from the Commodity Futures Trading Commission on Friday
showed currency speculators nearly doubled their bets against the
dollar in the week ended July 21, with the value of dollar net
short positions reaching its highest since mid-July 2008.
[]
Traders said Japanese exporters had placed big dollar sell
orders above 95.00 yen, which were likely to cap the dollar's
gains this week.
But the dealer at the Japanese bank also said traders would
be watching the impact on the yen from launches of Japanese
investment trusts, or "toshin", later this week that focus on
overseas assets.
GAUGING US GROWTH
U.S. gross domestic product, due on Friday, is expected to
show the economy contracted for a fourth consecutive quarter in
April-June, the first time that has happened in records dating to
1947. []
Forecasts are for a contraction at an annual rate of 1.5
percent, less than the annual pace of decline in the first
quarter of 5.5 percent. Some analysts expect it to be the last
negative quarter of this recession.
The dollar has tended to suffer on upbeat U.S. economic news
in recent months as the global economic crisis has eased, with
investors gaining some confidence to move funds into assets they
expect to benefit first from a pull-up from recession.
It rallied briefly in early June when speculation flared
suddenly in the market that U.S. interest rates might have to
rise sooner than many anticipated.
That speculation has since cooled and Bernanke reiterated in
a TV programme on Sunday his core message that the recession
should end soon but that considerable risks remain.
He said the Fed expected that in the next couple of years
inflation would be quite low because of slack in the economy, but
if the economy began to show strength the central bank would have
to gradually unwind its special programmes. The Fed has been
buying U.S. Treasuries as part of its special measures.
The Treasury sells a record $115 billion this week and the
bond and currency markets are keen to see how demand holds up in
the face of rising stock markets and a potentially improving
economic backdrop.
(Additional reporting by Kaori Kaneko; Editing by Chris
Gallagher)
