* Continuing yield decline pressures dollar
* Aussie eyes China trade data for relief
* RBA quarterly monetary policy statement also in focus
By Shinichi Saoshiro
TOKYO, Aug 8 The euro was on the backfoot early
on Friday after European Central Bank President Mario Draghi
struck a cautious note on the euro zone economy, while lower
debt yields pressured the dollar against the yen.
The European Central Bank's decision on Thursday to leave
interest rates unchanged on Thursday was not unexpected, but
Draghi said the Ukraine crisis threatened the economy and
weakened the euro.
The euro traded little changed at $1.3360 after
shedding about 0.15 percent overnight. The common currency,
which hit a nine-month low of $1.3333 on Wednesday, stands to
lose about 0.5 percent on the week.
The dollar eased to 102.05 yen after the benchmark
10-year U.S. Treasury yield declined sharply overnight on
concerns over the escalating conflict in Ukraine, and a Russian
ban on Western food imports.
The greenback had risen as high as 102.46 on Thursday on
news that Japan's public pension fund plans to increase asset
allocations to the domestic stock market.
"Broadly speaking dollar/yen is still in a range centred
around 102. But it failed to establish a foothold above 103 last
week after the weaker-than-expected U.S. non-farm payrolls,"
said Masafumi Yamamoto, market strategist at Praevidentia
Strategy in Tokyo.
"With the economic impact of the Ukrainian conflict now
drawing more attention and Treasury yields declining, downward
bias for the dollar is building," he said.
Traders are also watching out for the outcome of the Bank of
Japan's monetary policy meeting later in the day for any cues.
While the BOJ is expected to stand pat on policy, a weaker
assessment of the economy by policymakers could stoke
expectations of further monetary easing and dent the yen.
The Australian dollar, which tumbled on Thursday after data
showed a surprising jump in the domestic unemployment rate, is
likely to look to Chinese trade data due at 0200 GMT for some
A strong rise in exports from the world's second-biggest
economy - Australia's major export market - should support the
The market will also pay attention to the Reserve Bank of
Australia's quarterly statement on monetary policy at 0130 GMT
for the central bank's views on inflation and growth views.
The Australian dollar was almost flat at $0.9267
after sliding nearly 0.9 percent on Thursday, when it hit a
two-month low of $0.9259.
(Editing by Shri Navaratnam)