FOREX-Dlr drifts as more data in focus after GDP cheer

* USD steady vs basket of currencies after retreat

* Eyes on more U.S. data later in the day

* Cross/yen soften after traders done with short-covering

By Satomi Noguchi

TOKYO, Oct 30 (Reuters) - The U.S. dollar drifted sideways after retreating against a basket of currencies on Friday as investors waited for more data later in the day which could sour the cheerful sentiment prompted by stronger U.S. growth numbers the previous day.

The greenback was back on the defensive on Thursday after government data showed the U.S. economy expanded in the third quarter, its first quarterly growth in more than a year, reversing falls in growth-linked currencies and the euro on profit-taking.

But investors remained sceptical about the U.S. economic outlook as government stimulus packages helped lift the consumer spending and home building components of GDP, and felt uneasy about building up riskier asset holdings at the same pace as in the past few months.

"Those U.S. GDP numbers gave dollar bulls some pause for thought..it wasn't going to be a one-way street," said Tony Beiber, forex analyst at Suncorp Bank.

"More U.S. data is due later this day and positive numbers could provide a fillip to commodities and stocks."

Investors will closely watch Friday's data including the University of Michigan consumer sentiment survey for October and the Institute of Supply Management Chicago's October index for manufacturing activity. [ECONUS]

Traders also said the biggest influence on the currency market would be month-end flows, with some hefty moves in global stock markets and portfolio rebalancing flows expected.

The U.S. dollar, which tends to fall when hopes of a global recovery emerge, traded below the 76 mark against a basket of currencies .DXY =USD and not far from a 14-month low of 74.94 struck on on Oct. 21.

The dollar index is now on course to record its seventh monthly decline in 2009 as the latest bout of short-covering, which gathered momentum earlier this week, fizzled out.

The euro EUR= was up 0.1 percent at $1.4844 after having jumped over 0.8 percent the previous day.

On Thursday, currencies such as the Australian and New Zealand dollars, stocks .SPX and commodities .CRB all rallied after the data showing the U.S. economy expanding at a faster pace than expected. [nN29354547]

Australian and New Zealand dollar trading volumes surged to their highest levels this month on Reuters Matching on Wednesday and Thursday, reflecting the bout of profit-taking which was then followed by short-covering as risk assets recovered.

The Aussie and the kiwi traded softly in Asia with the Aussie trading down 0.1 percent to $0.9148 AUD=D4 and the kiwi falling 0.2 percent to $0.7315 NZD=D4.

The yen JPY= edged up to 91.30 per dollar, after having lost ground broadly on Thursday.

On the crosses, it resumed rising against the Aussie AUDJPY=R and the kiwi NZDJPY=R as those who went sold cross yen very short-term are nearly done covering those positions, dealers said.

Japanese core consumer prices fell 2.3 percent in the year to September, with increasing signs that weak demand is weighing on prices.

The Bank of Japan, which meets and will announce results on Friday, is seeking to wind down its support for corporate finance, but persistent deflation will reinforce the market view that the BOJ will be one of the last central banks to raise interest rates, which is potentially negative for the yen. [ID:nT11674] (Additional reporting by Anirban Nag; Editing by Joseph Radford)