Reuters: US Dollar Report: FOREX- Dollar resumes rebound, weak China data hits Aussie

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FOREX- Dollar resumes rebound, weak China data hits Aussie Jun 10th 2013, 04:15 Mon Jun 10, 2013 12:15am EDT * Dollar stronger across the board, bought back after jobs report * Aussie under pressure after more lacklustre China data disappoints * BOJ meeting begins, steps to curb JGB volatility eyed By Sophie Knight TOKYO, June 10(Reuters) - The dollar extended its recovery against the yen in Asia on Monday, moving well away from a two-month low plumbed in the previous session, while the Australian dollar slumped after disappointing data from China, its biggest export market. The greenback rose to 98.12 yen, some 3.3 percent higher than a trough of 94.98 hit on Friday that marked its lowest level since April 4, when the Bank of Japan unleashed an audacious easing programme that accelerated the yen's slide. The move in the previous session came as investors scrambled to digest a highly-anticipated U.S. labour market report that showed a slightly better-than-expected 175,000 jobs were created in May, but unemployment was up 0.1 percent to 7.6 percent. ] Treasury yields eventually began rising after the report, spurring investors to snap up the greenback after having unwound their dollar-longs earlier in the week on disappointing private-sector jobs data. Investors have become fixated on improvements in the U.S. employment situation as it is a condition for the U.S. Federal Reserve to begin winding back its $85 billion-a-month bond buying programme, known as QE3, earlier than scheduled. "The U.S. jobs figures were strong, but not strong enough to increase expectations that the Fed will taper QE3," said Junya Tanase, executive director of forex at JPMorgan in Tokyo. Tanase said an end to the Fed's easing programme could curb risk appetite if it raises dollar funding costs for investments into emerging markets. However, trimming the bond-buying stimulus will not necessarily raise those costs as it does not equate to tightening, he added. The dollar index added 0.2 percent to 81.880 after plunging to a more than three-month low of 81.077 on Thursday. That tightened the clamp on the Australian dollar, which stumbled 1 percent to $0.9411 after diving to a 20-month low of $0.9393 after unexpectedly weak trade data and signs of weak domestic demand in China, the country's biggest export market. China's economy grew at its slowest pace for 13 years in 2012 and so far this year economic data has surprised on the downside, prompting warnings from some analysts that the country could miss its growth target of 7.5 percent for this year. The news also kicked the New Zealand dollar down 0.6 percent to $0.7838 after it touched a near-11 month low of $0.7821 in earlier trade. Support for the Kiwi is said to lie at $0.7808, a low last seen in June 2012, with resistance around $0.7860. The euro was also stronger against the yen, adding 0.5 percent to 129.60, after briefly tapped 129.99, the 50 percent retracement of its drop from a 3-year high of 133.82 hit on May 22 to a low of 126.19 on Friday. The yen saw a broad rebound last week as the Japanese stock market skidded, prompting investors to pare back the dollar hedges they put in place when it was heading up. Some investors are hoping that the Bank of Japan could extend the duration of its fixed-rate lending to two years at the end of a two-day policy meeting that begins on Monday, making it easier for banks to hedge against increases in yields, reducing their need to sell bonds and thereby curbing recent volatility and spikes in JGB yields. "As stocks are almost back at where they were before the BOJ announced its easing programme, some people might be expecting them to do something, and if they don't, we could see stocks sold off further," said Tanase of JPMorgan. High hopes for Abenomics, the brand of economic policy touted by Japanese Prime Minister Shinzo Abe, have faded as the dollar-yen and stocks have dropped, while bond yields have risen--the opposite of what the BOJ was aiming for. But data on Monday morning showed that Japan's current account surplus doubled in April from a year earlier, while bank lending posted its biggest annual rise in over three years, in a fresh sign the government's aggressive policies to stimulate growth are paying early dividends. Link this Share this Digg this Email Reprints

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