RTRS: Dollar holds ground after jump, ECB and BOE in focus
TOKYO (Reuters) - The dollar mostly held its ground on Thursday after a big reversal from 2009 lows on comments from Asian monetary officials and weaker-than-expected U.S. data that took the wind out of a risk rally in other major currencies.
Investors had a reality check on Wednesday when data showed the vast U.S. service sector contracted for the eighth straight month in May and employers axed 532,000 private-sector jobs, undermining optimism about an economic turnaround.
Comments from several Asian monetary officials to Reuters that Asian central banks would keep buying Treasuries even if the U.S.' credit rating were to be cut also boosted the dollar.
The greenback has come under pressure in the past few weeks partly because the market is nervous about the U.S.' ability to finance its growing debt issuance.
The dollar rebounded more than 1 percent from 2009 lows against a basket of six currencies on Wednesday although the move had stalled by Thursday as investors awaited policy decisions at the European Central Bank and the Bank of England.
"Asia's left picking up the pieces after a big move overnight," said a senior trader at a European bank in Hong Kong.
He said the dollar's rise was a correction to its steep losses of recent weeks rather than a change in trend.
"The dollar has retraced strongly and Asia is having a day of consolidation. But the dollar index and the dollar against the majors seems to have found a base."
The euro was flat at $1.4170 on electronic trading platform EBS, well off its 2009 high of $1.4339 after falling 1 percent on Wednesday.
The dollar gained 0.1 percent to 96.12 yen, while the euro rose 0.3 percent to 136.34 yen.
The European Central Bank is expected to hold interest rates at 1 percent when it announces its decision at 7:45 a.m. EDTT.
The market is waiting to see details of its covered bond purchase plan to keep long-term rates down and see what its staff projects for economic growth and inflation this year and next.
Sterling held steady from late U.S. levels at $1.6310 after hitting a seven-month peak of $1.6664 on Wednesday. It has gained about 19 percent since mid-March.
The Bank of England is expected to keep its benchmark rate at 0.5 percent at its announcement at 7 a.m. EDT. It is also likely to stick to its current 125 billion pound ($208 billion) target for quantitative easing.
