* Aussie, Candian dollar better bid as Asian shares rebound
* Euro broadly lower as ECB officials sing from same dovish
* Dollar higher, ignores downgrade to Q1 GDP
* Yen underpinned by data showing Japanese selling of
By Ian Chua
SYDNEY, June 27 The Australian dollar and other
commodity currencies rose modestly on Thursday as Asian shares
recovered after a selloff earlier this week sparked by fears of
credit problems in China, while a dovish message from European
Central Bank officials kept the euro on the defensive.
The Australian dollar managed to outperform the greenback,
as Asian equities showed some signs of stabilising, posting a
gain of 1.6 percent.
Still some traders say concerns about a slowdown and
possible credit crunch in China could keep the Aussie in check.
"There will surely by a bear market rally from time to time
but I don't think investors are eager to take risk in Asia now,"
said a trader at a Japanese bank.
The currency is also partly helped by development in local
A leadership change in the Labor Party saw Kevin Rudd
return as Australian prime minister. Ousted Julia Gillard had
struggled to win public support with opinion polls suggesting
her minority government was headed for a massive defeat at this
year's general election.
With Rudd back at the helm, the hope is there would be more
stability in the Labor Party, although local politics rarely
have a lasting impact on markets because the major parties are
considered very middle of the road in economic policy.
The Aussie dollar rose 0.4 percent to $0.9314, near
a one-week high of $0.9345 while the Canadian dollar also gained
0.4 percent to C$1.0435 per U.S. dollar.
The euro was last at $1.3031, up slightly from late
New York levels but still not far from a four-week low near
$1.2984 plumbed on Wednesday.
Against the yen, the common currency was at 127.36
, having skidded 0.7 percent to a one-week low of
126.57 on Wednesday.
ECB President Mario Draghi, Executive Board member Yves
Mersch and policymaker Christian Noyer, were all out in force on
Wednesday stressing the ECB was not preparing to start winding
down stimulus, in contrast to the Federal Reserve.
"The euro has shifted from being a relative outperformer to
relative underperformer this week," BNP Paribas analysts wrote
in a client note.
"A number of ECB officials have been 'on message' in
stressing that policy will remain accommodative, apparently
eager to draw an implicit contrast between its stance and the
Fed's tapering message."
Not helping the euro, two newspapers on Wednesday warned
Italy faced 8 billion euros in losses on derivative contracts
restructured at the height of the euro zone crisis, prompting
the country's economy minister to deny the reports.
Pressure on the euro helped the dollar index rise to
83.025 on Wednesday, a high last seen since the start of the
month. It stood at 82.792, just below the 61.8 percent
retracement of its May-June fall at 82.970.
Traders said month and quarter-end buying further supported
the U.S. dollar, which largely shrugged off a surprisingly sharp
downgrade to first quarter U.S. economic growth.
The Commerce Department said gross domestic product expanded
at a 1.8 percent annual pace in the quarter, compared with a
previously reported 2.4 percent pace.
Traders said the data was historical and a recent batch of
encouraging reports indicated that the economy was on a gradual
recovery path, keeping intact expectations for the Fed to start
rolling back its stimulus later this year.
The U.S. dollar hardly budged against the yen, capped by
data that showed large Japanese investors sold foreign bonds for
six weeks in a row last week, in their largest net selling in 14
The dollar was steady at 97.77 yen.
There is little in the way of major economic data in Asia,
while Europe has a slew of reports including euro zone economic
sentiment, consumer sentiment, German employment and import