FOREX- Dollar eases on downbeat data, retreats from 4-1/2 yr high vs yen
* U.S. manufacturing data puts brake on dollar's rise
* Euro steady after slumping to six-week low as euro zone economy contracts
* Kiwi gains 0.3 pct, pressure from dollar eases
By Sophie Knight
TOKYO, May 16 (Reuters) - The dollar moved away from a fresh 4-1/2 year high against the yen hit in the previous session after disappointing U.S. industrial data caused U.S. Treasury prices to rise for the first time in a week, while the euro wobbled near a six-week low.
The greenback was largely steady at 102.15 yen in early Asian trade on Thursday after rising to 102.76 on Wednesday before pulling back on data showing U.S. industrial production fell more than expected in April, and the New York Fed's "Empire State" business conditions index contracted in May.
The dollar index dropped 0.1 percent to 83.711 on Thursday, extending a 0.6 percent fall on the data during the previous session, though analysts say the greenback's current bullish streak is likely to continue over the long run.
Against a basket of currencies, it is still up 0.8 percent on the week, after gaining 1.2 percent last week.
"Of course data releases will impact the dollar, but the real focus is the Fed's QE3 programme. People will be watching statements from officials today and Bernanke at the weekend very closely for hints on when they might exit," said Yoshio Takahashi, currency strategist at Barclays in Tokyo.
"The data just shows that the U.S. economy is not uniformly strong, so there is uncertainty about when they could stop easing," he added.
Financial markets are buzzing with speculation that the U.S. Federal Reserve will begin winding down its asset-purchasing programme, known as "QE3", or quantitative easing, which is tantamount to printing money.
That anticipation has contributed to the dollar's strength against traditional safe havens such as the yen and the Swiss franc, which has dropped 3.8 percent this month against the greenback.
The Aussie, meanwhile, has lost 4.5 percent this month, exacerbated by a surprise rate cut from the central bank, while the Kiwi has dropped 3.6 percent.
On Thursday, the Australian dollar gained 0.1 percent to $0.9907, while the Kiwi gained 0.3 percent to $0.8260.
The dollar has jumped 17.8 percent against the yen this year. If it manages to hold onto those gains for the remaining seven months of the year it would mark its best year since 1979, when it gained 23.7 percent against its Japanese counterpart.
Barclays said in a report that most of the dollar's spurts against the yen have taken place outside of Asian trading hours, suggesting that local players are not the major drivers of yen weakness.
The euro was steady at $1.2889 following a beating on Wednesday after data showed France had slipped into recession, while Germany's rate of growth was unable to prevent the euro zone economy from contracting for a sixth consecutive quarter.
The news pushed the common currency down to $1.2642 on Wednesday, its lowest since April 4.
Analysts say that the euro would suffer a broad sell-off if the European Central Bank took the deposit rate to below zero, as officials have hinted they could do if the economy slows further, meaning depositors would be charged to park their funds in the bank.
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