* Dollar on a roll given outlook for US economy, yields
* Focus on Chinese data on Monday, Friday's US jobs report
* Aussie dlr skids to three-year low, more losses seen
By Wayne Cole
SYDNEY, July 1 The dollar was holding broadly
firm on Monday after a flood of month-end flows left it well
positioned for a week packed with major economic data and
central bank meetings.
Manufacturing report from China will get the ball rolling on
Monday with the risk that any disappointment will depress
currencies across Asia to the benefit of the U.S. dollar.
Friday's report on U.S. payrolls will be even more critical
than usual as a upside surprise would only fan speculation about
an early start to tapering by the Federal Reserve, likely
lifting both Treasury yields and the dollar.
"This week will be huge for bond bears if the payrolls
report validates the Fed's decision to lower its unemployment
forecasts," noted analysts at JPMorgan.
Rising yields and an improving domestic economy give the
U.S. currency a big advantage over the euro and yen where policy
is expected to stay super-easy for a long time to come.
That is reflected in the dollar index which hit a
four-week peak of 83.344 on Friday, having recovered all the way
from a 80.498 trough in just eight sessions. The index was up a
shade at 83.211 early Monday.
The dollar also edged up to 99.45 yen, after
finishing at a firm 99.17 in New York on Friday.
Dealers reported offers from Japanese exporters but also
talk of stop-loss bids above 99.50, with more beyond the
psychological 100.00 barrier.
Technically, resistance came in 99.92, the 61.8 percent
retracement of the drop from 103.74 to 93.75. Support to be
found at the 55-day moving average at 99.12.
Japanese economic news continued its better run with
sentiment at big manufacturers improving markedly in the latest
Bank of Japan survey. Notable was a big rise in
business investment plans.
Yet these are just early days in the BOJ's massive
quantitative easing campaign which is set to run for much of the
next two years.
Against the euro, the dollar was on top at $1.3010
and angling to test resistance in the $1.2983/2990 area.
The European Central Bank and the Bank of England have
policy meetings on Thursday and the former is likely to
emphasise that the eurozone economy is in a much different stage
of recovery than the United States.
"President Draghi is likely to use the press conference to
"speak soft", said analysts at RBC Capital Markets.
"We expect the ECB to continue emphasising that
extraordinary accommodative policies will continue, and that it
has other options if looser monetary policy is needed."
Also holding a policy meeting this week is the Reserve Bank
of Australia (RBA) and, while it is widely expected to hold
rates steady at 2.75 percent, analysts suspect it will welcome
the recent decline in the local dollar while keeping a bias to
The Australian currency touched a three-year low of $0.9110
early Monday and traders assume it is only a matter of
time before it tests 90 cents.