* Markets thin before ECB, BOE meetings and US payrolls
* USD backtracked a little, EUR/JPY choppy on political news
* AUD bounces from three-year low, downtrend still in place
By Wayne Cole
SYDNEY, July 4 The U.S. dollar steadied in Asia
on Thursday having veered lower overnight as investors trimmed
back long positions into a U.S. holiday and a raft of
potentially market-moving events, including the all-important
Dealers said political uncertainty in Portugal had sparked a
sharp fall in euro/yen, which in turn lifted the Japanese
currency across the board. But the move was impulsive and soon
ran out of juice.
Early in Asia, the dollar had edged back up to 99.98 yen
, from a low of 99.30, while the euro returned to 130.11
yen from a trough of 128.60.
The single currency also bounced from a $1.2921 low on the
U.S. dollar to reach $1.3010, though not with a lot of
conviction. The dollar index came off 0.37 percent to 83.218
Sterling was one of the biggest gainers as UK service data
proved far stronger than expected, lifting it over a
full cent to $1.5276.
The biggest loser was again the Australian dollar which
carved out a fresh three-year trough of $0.9037 amid
speculation that interest rates could be cut next month. Yet the
market is already hugely short of the currency and a bout of
profit-taking helped it up to $0.9110 early on Thursday.
Overall, caution ruled given looming central bank meetings
in the euro zone and UK and the market so hyper sensitive to the
outlook for Federal Reserve policy.
No policy change is expected from the European Central Bank
later on Thursday but a jump in yields in Portugal, and other
periphery markets, should keep President Mario Draghi sounding
"Draghi is likely to emphasize that the growth outlook is
still subject to downside risk, that the ECB is ready to act and
that there are still tools in the toolbox," said JPMorgan
analyst Greg Fuzesi in a note.
"Draghi will also say that the exit from the current policy
stance is "very far away", "very distant" or some variant of
The Bank of England has its first meeting under new Governor
Mark Carney, who took over just this week. There has been some
speculation he would break with convention and release a
statement even if the bank takes no action.
A swing higher in Treasury yields offered some support
to the dollar while U.S. data was too mixed to offer guidance on
when the Federal Reserve might start to taper its asset buying.
More important, of course, will be the payrolls report on
Friday and there was much talk in the market about the tendency
of the series to disappoint in June.
Over the last sixteen years the report has come in under
expectations 75 percent of the time with an average miss of
70,000. In addition, four of the last five June releases have
fallen short of expectations.
Forecasts for employment range from 125,000 to as high as
220,000, with a median at 165,000.
Elsewhere, events in Egypt lifted oil prices but had little
impact in the forex market, said dealers.
"Currencies exposed to global energy, such as the JPY, have
yet to reflect any discernible reaction," noted analysts at ANZ.