* Aussie and Kiwi main gainers as sell-off pauses
* Dollar inches up against yen, holds above Monday's 7-week
* Turkish central bank stems tide by calling emergency
* Fed meeting may be next trigger for emerging worries
By Patrick Graham
LONDON, Jan 28 The dollar regained a firmer
footing against the yen on Tuesday as investors took a breather
from a sell-off of stocks and emerging market assets that has
driven money into traditional safe haven currencies.
European shares opened higher after three days which have
knocked 3.5 percent off the MSCI world stock index and hammered
the developing world's more fragile economies including Turkey,
Argentina and Ukraine.
That has benefited the euro, dollar, yen and Swiss franc
while hurting currencies more closely linked to commodity prices
and growth in emerging markets like China, such as the
The Aussie, helped by an upbeat business survey, and the New
Zealand dollar both recovered around 0.7 percent against their
U.S. counterpart on Tuesday.
The main factor halting the sell-off, broadly a response to
the prospect of tighter monetary policy in the developed world,
were signs of a potential policy response from Turkey at an
emergency central bank meeting later on Tuesday.
But with the U.S. Federal Reserve expected on Wednesday to
signal it will continue to rein in its huge bond-buying
programme this year, analysts said any respite may be brief.
"When one central bank takes action to stem the tide, that
will tend to have a knock-on effect for the others," said
Stephen Gallo, FX strategist at BMO Capital Markets in London.
"But with the Fed message tomorrow unlikely to be dovish, I
wouldn't rule out another move (later this week)."
The yen still tends to be investors' first choice as a safe
haven for their money in times of stress and it hit a seven-week
high against the dollar on Monday. The dollar recovered
about a third of a percent on the day in early European trade.
Some players have been playing the Aussie and Kiwi off
against each other in recent weeks, judging the Australian
currency's fall to be nearing an end and hikes in New Zealand
interest rates to be largely priced in.
There are broad worries over how the Australian economy will
hold up in the face of slackening commodity markets and a
slowdown in China, but the NAB measure of business conditions
jumped to its highest in more than 2-1/2 years in December.
The Aussie dollar rose to $0.8796, pulling away
from Friday's low of $0.8660, its lowest level since July 2010.
Sterling has rebounded from a dip at the end of last week
and growth numbers will provide the latest stimulus for the
market after a run of data that has prompted many investors to
bring forward their expectations of a first rise in UK interest
Several banks said that only a number that fell short of
forecasts for a 0.7 percent expansion on the quarter would be
enough to knock sterling out of a positive trend that has seen
it threaten 2008 highs against the dollar above $1.66.
It traded up 0.2 percent at $1.6610 in early trade.
"Most investors seem to think that a GDP number broadly in
line with the market forecasts should keep markets betting on
early BoE exit from monetary stimulus," Citibank said in a
morning note. "This should continue to support sterling."