FOREX-Dollar holds gains after relief from Bernanke, oil
* Dollar up after Bernanke says Fed may extend Wall St aid
* Oil retreat helps dollar, soothes some economy concerns
* Aussie dips on poor confidence, housing data
* U.S. inventory data key for oil, dollar
TOKYO, July 9 (Reuters) - The dollar held steady on Wednesday after rebounding the previous day on a slide in oil prices and after Federal Reserve Chairman Ben Bernanke assured investors the central bank will keep assisting financial markets as long as they remain frail.
Bernanke said the Fed was watching markets closely and may keep open the emergency lending facilities for big Wall Street firms, launched after the collapse of Bear Stearns, longer than initially planned. [ID:nN08304308]
Those remarks helped relieve market players who were rattled on Monday by a report that the top U.S. mortgage lenders, Fannie Mae (FNM.N) and Freddie Mac (FRE.N), could have to raise a combined $75 billion of capital due to upcoming accounting rule changes.
The regulator of Fannie Mae and Freddie Mac later said that the expected change in rules should not affect their capital position. [ID:nN08371498]
The dollar also got a boost from the roughly $10 retreat in oil prices from last week's record high near $146, providing some hope to investors worried about the corrosive impact of energy costs on faltering corporate profits and global growth.
But traders said a more sustained drop in oil and commodity prices would be needed to help improve the dollar's fortunes.
"We would probably have to see a larger drop than that to really turn the dollar. Maybe if it broke back below $120 ... then you might definitely see a feed-through to the dollar," said Rick Lloyd, head of G10 currency trading at ABN AMRO in Singapore.
Oil was little changed on the day, trading near $136 a barrel CLc1 in Asia. [O/S]
The dollar has been stuck near a record low against the euro as investors have fretted about steep oil prices, more subprime mortgage write-downs at U.S. banks and the Fed possibly keeping interest rates on hold in coming months to nurture the economy.
Activity was subdued in Asia, as it has been over the past few weeks, with major currencies and other major assets stuck in familiar ranges, traders said.
The dollar was little changed at 107.42 yen JPY= after a sharp rebound from a low of 106.25 struck on Tuesday as European stocks were tumbling.
Japan's Nikkei share average .N225 was up 1.8 percent, recovering from a three-month low hit the previous day.
But the rise in stocks was not benefitting carry trades and hurting the yen as much as in the past as market players seem reluctant to put on the risky positions.
The yen was also little moved by data showing Japanese core machinery orders jumped 10.4 percent in May, suggesting capital spending was holding up despite the hit to companies from soaring energy and raw material costs. [ID:nT22777]
The Australian dollar dipped after data showing consumer confidence hitting a 16-year low and demand for home mortgages suffering the biggest monthly fall in eight years, the latest signs that the economy is losing steam. [ID:nSYD27641]
The Aussie fell 0.3 percent to $0.9501 AUD=D4.
The euro was also steady at $1.5666 EUR= and retreated from a high of $1.5740 struck before Bernanke's comments.
Junya Tanase, a currency strategist at JPMorgan Chase in Tokyo, said weekly U.S. statistics on energy inventories later on Wednesday would likely be key for oil prices, with any further drop cooling U.S. inflation expectations and lifting the dollar.
As oil has retreated since the start of the week, the expected annual rate of U.S. consumer prices reflected in five-year inflation-protected bonds US5YTIP=TWEB compared with regular five-year Treasuries has fallen about 20 basis points to near 2.56 percent.
The single European currency has pulled back from a two-month high of $1.5910 struck last week but remains stuck in a broad range between the $1.6020 record peak hit in April and lows near $1.5300 touched in May and June. (Editing by Neil Fullick)
