Reuters: US Dollar Report: FOREX-Dollar near 7-week low as China trade data, Fed uncertainty hurt

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FOREX-Dollar near 7-week low as China trade data, Fed uncertainty hurt Aug 9th 2013, 00:16 Thu Aug 8, 2013 8:16pm EDT * Dollar fragile after 5 straight losing sessions * Risk currencies supported after China trade data * More data from China to come on Friday * Dollar hampered by Fed uncertainty By Hideyuki Sano TOKYO, Aug 9 (Reuters) - The dollar licked its wounds on Friday after steep losses over five straight days, holding near a seven week low against a basket of currencies as risk-seeking investors abandoned the greenback after surprisingly strong trade figures from China the previous day. Traders say the dollar's precipitous fall also reflected uncertainty on how soon the Federal Reserve will start reducing its stimulus, which prompted investors to unwind some of their bullish dollar bets. The dollar's index against a basket of six major currencies hit a low of 80.868 on Thursday and last stood at 81.07 in early Asian trade, within sight of its June low of 80.498. Fed policy makers have suggested in recent weeks the Fed could start to scale back its monthly bond buying as soon as September, but this will depend on further improvement in the jobs market. Thursday's weekly jobless claims data suggested the U.S. job market remains on the mend. Yet that alone was not enough to convince investors that the Fed will trim its bond buying of $85 billion a month next month after data last Friday showed U.S. employers slowed their pace of hiring in July. As the dollar sagged, the euro hit a seven week high of $1.3401 on Thursday and last stood at $1.3378, not far from its June peak of $1.34175. The Aussie held onto sharp gains made on Thursday following stronger-than-expected Chinese data, fetching $0.9105, recovering from three-year low of $0.8848 hit at the start of this week. "The relief brought by stronger-than-expected exports and imports from China in the past 24 hours extended during the New York hours... Developed market currencies linked to China such as the AUD and NZD outperformed, as well as emerging market ones," said analysts at Barclays in a note. The Australian currency is bracing for Reserve Bank of Australia's quarterly policy statement due at 0130 GMT. Chinese economic data, including inflation, industrial production and retail sales is also due later in the day. Against the yen, the U.S. dollar bounced back overnight, in part helped by relief from Chinese data, though traders said the move probably had more to do with a quirk in holiday-thinned trade rather than economic fundamentals. "Although the dollar rebounded against the yen yesterday, it doesn't feel like it has bottomed out. The chart looks still very weak and I suspect there's chance the dollar will test 95 yen in the near future," said a trader at a Japanese bank. The dollar traded at 96.80 yen in early Asian trade, maintaining its 0.3 percent gain on Thursday and about a full yen above a seven-week low of 95.81 yen. Link this Share this Digg this Email Reprints

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