* Focus on ECB policy review later on Thursday
* Aussie bolstered by upbeat retail sales data
* Yen holds steady after recent rally
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, Feb 6 The euro held steady on
Thursday ahead of the European Central Bank's policy review,
while the Australian dollar rose as strong data reinforced the
view that Australia's central bank was done cutting interest
Most major currencies stuck to fairly narrow ranges ahead of
key event risks, namely the ECB's policy decision due later on
Thursday and U.S. jobs data on Friday.
The euro held steady at $1.3528, hovering above a
two-month low near $1.3477 that had been set on Monday.
Speculation that the ECB may be forced to ease monetary
policy further to ward off the threat of deflation has weighed
on the euro recently, although most money market traders polled
by Reuters expect no imminent action from the ECB, believing the
central bank would rather wait.
Data released last week showed that annual inflation in the
currency bloc slowed to 0.7 percent in January, well below the
ECB's target of just under 2 percent.
"Our view is that if they don't cut today, they may trim
rates in March. We're forecasting a small cut in March. We
wouldn't rule out something today although it seems unlikely,"
said Mitul Kotecha, Hong Kong-based head of global foreign
exchange strategy for Credit Agricole.
The euro could see a knee-jerk bounce if the ECB were to
hold off from monetary easing on Thursday, but will probably
quickly run into selling if there is such a rally, he added.
Against the yen, the euro was little changed near 137.27 yen
, staying above an 11-week low of 136.25 yen struck on
The dollar also held steady versus the yen near 101.47 yen,
staying above Tuesday's 11-week trough near 100.76 yen.
So far this week, the dollar is down around 0.5 percent
against the yen, with the Japanese currency having gotten a
boost from safe haven demand in the wake of a recent selloff in
emerging market equities and currencies.
Mixed U.S. data on Wednesday offered little support for the
greenback. Growth in the service sector picked up pace in
January while private employers added 175,000 jobs in January,
the smallest gain since August.
Still, many analysts are optimistic that the closely watched
U.S. non-farm payrolls report on Friday will show January hiring
rebounded after a weak December, which saw a payroll gain of
The Australian dollar outperformed after strong data added
to the view the Reserve Bank of Australia (RBA) was done cutting
The latest bounce came after better-than-expected retail
sales in December, which added to evidence that consumer
spending was helping revive the economy from a cooling mining
Other data also showed the country boasted its biggest trade
surplus in two years in December as exports to China surged to a
record A$94 billion for all of 2013. China is Australia's top
The Australian dollar climbed 0.6 percent to $0.8965
The Aussie dollar has gained 2.5 percent so far this week,
having rallied after the RBA on Tuesday dropped its easing bias
and toned down its campaign of jawboning the currency lower.