* Liquidity thinning ahead of U.S., London holiday weekends
* Euro pinned down by expectations of ECB easing steps
* Dollar supported as upbeat U.S. data lifts U.S. Treasury
* Investors eye Thai situation after military coup
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, May 23 The dollar steadied near
one-week highs against the yen and advanced on the euro on
Friday after promising U.S. housing and factory activity data
nudged U.S. Treasury yields away from recent lows.
The dollar index, which tracks the greenback against
a basket of rivals, edged up to 80.264.
Against the yen, the dollar was flat at 101.72, not
far from its Thursday high of 101.82 and well off a 3-1/2 month
trough of 100.805 yen plumbed on Wednesday.
"There's not a lot of top-tier data out, and it's also going
to be a long weekend in London and the U.S., so I imagine
liquidity will be thinning out," said Sue Trinh, currency
strategist at RBC Capital Markets.
Risk appetite was subdued, she said, as the Thai coup and
renewed tensions on the Korean peninsula "seems to have hit FX
markets a little harder than other asset markets, with a few
exceptions, such as dollar/yen."
The usually safe-haven yen did not get much support from
news of Thailand's bloodless army coup late on Thursday. The
baht edged up on Friday to 32.54 per dollar, helped by
demand from exporters for settlements.
Also on Thursday, North Korean artillery fired at least one
shot which landed near a South Korean navy patrol ship but did
not hit the vessel, according to a military official in Seoul.
The euro eased about 0.1 percent to $1.3645,within
sight of a three-month low of $1.3634 set on Wednesday.
In the U.S. session on Thursday, investors found an excuse
to buy back the dollar after data showed U.S. home resales rose
in April and the supply of properties on the market hit its
highest level in nearly two years, promising signs for the
Financial data firm Markit also said its preliminary
or "flash" U.S. Manufacturing Purchasing Managers Index rose to
56.2 in May from 55.4 in April. Economists polled by Reuters
expected a reading of 55.5.
U.S. Treasury yields edged up on the data with the benchmark
yield briefly hitting a 1-1/2 week high of 2.57
percent. In Asian trade, the 10-year yield stood at 2.55
percent, flat from the U.S. close.
ECB, ELECTIONS LOOM OVER EURO
The euro drooped under growing expectations that the ECB
will take further easing steps next month.
Analysts polled by Reuters this week expect the ECB will cut
its main interest rate and push the deposit rate below zero in
an attempt to stop inflation from slowing any further.
In Europe, surveys on Thursday showed a slight softening in
the strong pace of growth in the private sector with France's
composite PMI slipping back below the 50 mark after just two
months in growth territory.
Concern that the EU elections could destabilise some euro
zone governments at home also weighed on the single currency.
In Italy, for example, a poor result for Prime Minister
Matteo Renzi's party could weaken his drive for swift reforms
that he promised when he took power in a party coup.
The bulk of countries vote on Sunday, when any trend towards
the political extremes may become clearer. Consolidated results,
including the allotment of seats in the parliament, will be
announced at around 2100 GMT on Sunday.
(Editing by Shri Navaratnam & Kim Coghill)