* Expectations of clear-cut QE3 hint at Jackson Hole dim
* Market jittery on Europe as shares fall
* Yen shows no reaction to weak Japan output data
* Aussie at 1-month low, just above key Ichimoku support
By Hideyuki Sano
TOKYO, Aug 31 The euro hovered near this week's
low against the dollar in early Asian trade on Friday, as the
market nervously looked to whether the U.S. Federal Reserve
chief will indicate the possibility of imminent monetary
stimulus later in the day.
A fall in European shares to four-week lows are also fraying
traders' nerves after the single currency enjoyed a month-long
recovery on hopes of more policy action to counter the debt
crisis infecting Europe.
The euro stood at $1.2514, not far from its low so
far this week, though it looks likely to end up on the month as
hopes that the European Central Bank could start buying Spanish
bonds to lower Madrid's borrowing costs have supported the
But the euro has been unable to rise above its seven-week
high of $1.2590 hit last week. Its initial support is seen at
$1.2465, this week's low as well as its tenkan line on the daily
After a brief summer lull this month, the common currency is
expected to face a real test from next month, as investors look
to whether the ECB's intervention can help Spain stand on its
feet again to finance its debt.
But its fate in the near term is expected to depend on Fed
Chairman Ben Bernanke, who will talk about "Monetary Policy
Since the Crisis" at 1400 GMT at an annual informal gathering of
central bankers in Jackson Hole, Wyoming.
There are expectations he may hint that the Fed will start
more asset purchases, dubbed QE3 in markets as that would be the
Fed's third round of quantitative easing, at its next policy
meeting on Sept 12-13. But optimism for more stimulus steps to
prop up growth have waned lately, market players said.
"Market expectations on his Jackson Hole speech have receded
a bit. He is unlikely to give clear signals as recent economic
data has not been so bad," said Yunosuke Ikeda, senior FX
strategist at Nomura Securities.
U.S. consumer spending rose by the most in five months in
July, data showed on Thursday, while the number of Americans
filing new claims for jobless benefits held steady last week.
Atlanta Fed President Dennis Lockhart, seen as a centrist
voter on U.S. monetary policy, also said on Thursday that it
will be a "close call" when U.S. central bank policymakers meet
next month to decide whether to ease policy more.
Against the yen, the dollar slipped 0.2 percent to 78.48 yen
due to month-end selling by Japanese exporters, though it
stayed within its familiar range of the past week or so.
The yen showed no response to surprisingly weak Japanese
industrial output data, which fell 1.2 percent in July despite
economists' expectations of a rise of 1.7 percent.
Still, the data highlighted growing worries about a global
slowdown, amid signs that growth in China continues to ease.
One of the victims of China's slowing growth, the Australian
dollar, continued to underperform, hitting a fresh one-month low
of $1.0276 on Thursday and last stood at $1.0292.
Against the yen it also hit a fresh one-month low of 80.72 yen.
As Australia's mining boom has been driven by China's strong
appetite for iron ore and other commodities, signs of a sharp
fall in demand for these products has put the Aussie under
pressure this month.
On the Ichimoku charts, the Aussie is trading just above an
important support of the cloud top against the dollar, at
$1.0279 on Friday. Against the yen, it already slipped below the
cloud-top, which comes at 80.90 yen on Friday.
A decisive break of these levels could strengthen bearish
sentiment on the currency.
Below that, one major support is its 38.2 percent
retracement of its rise from June to early August at $1.0220.