* Weak China trade data would be major risk for Aussie
* BoJ expected to hold steady but could surprise
* Net short positions in yen still large
By Cecile Lefort
SYDNEY, April 10 The euro was largely steady
against the dollar on Tuesday as the market awaits China's trade
data and an announcement by the Bank of Japan following a
two-day monetary policy meeting.
The euro clung to $1.3111, having bounced from a
four-week low of $1.30330 hit on Monday but stopped short of
resistance around $1.3130.
Overall, risk assets were reasonably resilient as a large
number of investors seem to be wagering that soft U.S. payrolls
data will bring forward the next round of quantitative easing.
"The market, as always, is holding out hopes that the Fed
will do more to boost output if required," said David Scutt, a
trader at Arab Bank Australia.
Earlier on Tuesday, a keenly awaited speech by Federal
Reserve Chairman Bern Bernanke proved to be a non-event as he
refrained from discussing monetary policy.
Markets, however, will be looking at a raft of other Fed
speeches this week for any hint of more easing, which would
likely see the U.S. dollar fall to the benefit of risk
A break of Thursday's $1.3165 high would see the euro target
the top of Ichimoku cloud top at $1.3263.
However, should the Fed signal the bar for further
stimulatory policy remains very high, risk assets including the
Australian dollar, could be hit hard.
The Australian dollar slipped to a three-month low last week
due to soft local data, fears about a hard landing in China and
expectations for a cut in domestic rates next month.
Trade figures from China will be a flash point with
expectations of a sharp slowdown in annual growth of both
exports and imports in March.
Markets have been concerned about a hard landing in China
and Monday's high inflation reading of 3.6 percent certainly
dealt a blow to hopes for more stimulus from Beijing.
A weak trade number could see the Aussie plumb fresh lows to
as deep as $1.0160, levels not seen since January 9. It
was last at $1.0310.
Australia is very sensitive to news out of China, its key
The Bank of Japan's two-day policy meeting ends later on
Tuesday, with an announcement due after 0330 GMT. While it is
expected to be holding fire, the market is wary in case it
springs another surprise following its easing in February which
triggered a broad fall in the yen.
The dollar nudged up 0.2 percent to 81.72,
off one-month lows of 81.190 on Monday.
The latest data from the U.S. Commodity Futures Trading
Commission shows currency speculators slightly trimmed their net
short positions in the yen in the week ended April 3 to 65,108
That was still close to the previous week's 67,622
contracts, which was the biggest net short position in the yen
since July 2007.
The dollar index was steady at around 79.740, well
off a one-month trough of 78.865 hit last week.