* U.S. consumer sentiment sours in July
* Market watching stocks, U.S. earnings for direction
* SNB to stick "decidedly" to preventing franc rise - Roth
* ECB starts covered bond purchases slowly
(Recasts with reaction to U.S. data, adds comment, updates
prices)
By Nick Olivari
NEW YORK, July 10 (Reuters) - The dollar and yen rose
against other major currencies on Friday with investors
cautious as the U.S. corporate earnings season began and
benchmark stock indexes fell.
A report showing that U.S. consumer sentiment soured in
July further bolstered the two currencies, which strengthen
when investors become averse to risk due to pessimism about the
prospects for a global recovery.
The yen hit a five-month high against the U.S. dollar this
week and surged to two-month highs against the euro and
Australian dollar as investors unwound bets in riskier assets
that they had made using the low-yielding Japanese currency.
The yen lost some of those gains on Thursday but then held
its ground as other currencies lost momentum after U.S. stocks
fell. []. A profit warning from Chevron <CVX.N>
added to the specter of a weaker-than-expected second half
economic recovery. [].
"It underlines the ongoing gloom facing the U.S. consumer
and further delays prospects for a near-term recovery," said
Brian Dolan, senior currency strategist at Forex.com,
Bedminster, New Jersey of the most recent U.S. data. "That will
weigh heavily on risk sentiment, pushing stocks and yen crosses
down and boosting the dollar."
Midway through the New York session, the euro was 0.8
percent lower at $1.3920 <EUR=>. The euro <EURJPY=R> was down
1.4 percent against the yen at 128.53 yen.
The U.S. dollar index, which tracks performance against a
basket of six major currencies, was up 0.6 percent at 80.385
<.DXY>.
The dollar was down 0.7 percent at 92.33 yen <JPY=>, going
as low as 91.80 during the New York morning, according to
Reuters data. That was just above the five-month low.
The yen gained in particular this week as the U.S. dollar
status as a reserve currency came under scrutiny at the G8
meeting in Italy, although reaction was muted to calls from
China for a review of the reserve currency system at a meeting
of world leaders on Thursday.
Support from softer equities "and some worries over the
potential for near term economic recovery, both of which have
helped the dollar index push back towards its opening level for
this week," said Sacha Tihanyi, currency strategist at Scotia
Capital in Toronto in a note to clients.
SWISS FRANC EYED
The Swiss franc fell after Swiss central bank chief
Jean-Pierre Roth said in an interview published on Friday the
Swiss National Bank was sticking "decidedly" to its policy to
prevent a strengthening of the Swiss franc. []
The dollar gained 0.8 percent on the day to 1.0867 Swiss
francs <CHF=> while the euro rose 0.2 percent to 1.5126 francs.
Sterling fell 1 percent on the day to $1.6180 <GBP=>,
relinquishing gains made on Thursday in part after the Bank of
England surprised markets by not using the remaining 25 billion
pounds available under the current asset-buying program.
In other news, the European Central Bank and euro zone
national central banks bought 23 million euros' worth of
covered bonds under the 60 billion euro programme launched this
week, the ECB said on Friday. [].
The program is aimed at boosting lending to stimulate the
ailing economy.
The central bank has said it will review the program in
August when it releases new quarterly forecasts.
(Additional reporting by Steven C. Johnson in New York)
(Reporting by Nick Olivari; Editing by Theodore d'Afflisio)
