* Euro takes a breather after two days of gains
* Sterling higher after BoE keeps rates unchanged
* Aussie, Kiwi dollars recover from lows
* U.S. jobless claims to provide cue for dollar
By Anirban Nag
LONDON, May 9 The euro eased against the dollar
on Thursday, taking a pause after two days of gains, pegged back
by expectations of more monetary easing by the European Central
Bank and by a rise in Spanish bond yields.
The single currency lost ground against the British pound
after the Bank of England kept interest rates on
hold and left its asset buying programme unchanged.
It also fell against the Australian and New Zealand dollars
, which were buoyed by better-than-expected
jobs numbers. Both currencies rebounded from lows struck after
their central banks moved this week to tame their strength.
The euro fell to $1.31345 from a session high of $1.31775
, failing to build on gains made after robust industrial
data from Germany this week. It was partly hurt by a rise in
Spanish bond yields with most looking to sell at $1.3200.
"The euro has been supported by buying by sovereign
investors, who have been buying German bunds or stocks. Some of
those flows are slowing, and to us once the euro moves to around
$1.32, it is a sell," said Mankash Jain, head of FX at hedge
fund, Solo Capital.
"The macro economic fundamentals of the euro zone do not
give us a reason to buy the euro."
ECB policymakers Yves Mersch and Joerg Asmussen said on
Wednesday the central bank still had room to manoeuvre should
the euro zone economy continue to weaken. The ECB cut its main
rate to 0.5 percent last Thursday.
While German industrial data beat expectations, overall
economic activity across most of the euro zone remains sluggish,
keeping alive expectations that the ECB may act again soon.
"Investors have been focusing on the good German data and
ignoring the soft patch elsewhere," said Peter Kinsella,
currency strategist at Commerzbank. "The market being
structurally short of euros, we think there could be some more
gains before it eventually grinds lower."
One of the reasons euro is not falling sharply, especially
against the dollar, is because the U.S. economy appears to be
losing steam. That has underpinned expectations the Federal
Reserve will continue to keep policy ultra-loose.
U.S. weekly jobless claims due on Thursday will provide cues
about the labour market there.
AUSSIE AND KIWI RECOVER
Sterling rose to a session high of $1.5589 after
the BoE decision, from $1.5568 beforehand.
The Australian and New Zealand dollars also bounced after
both countries posted strong jobs data. Investors drove the
Aussie up 0.6 percent to $1.0232 after the economy
added 50,100 jobs in April, well above expectations.
The data helped it recover from a two-month low of $1.0155
struck on Tuesday, after Australia's central bank cut interest
rates to a record low.
The Kiwi rose 0.7 percent $0.8460 after data showed
unemployment falling to a three-year low in the March quarter
and a hefty rise in full-time jobs.
The currency had hit a trough of $0.8360 on Wednesday after
the Reserve Bank of New Zealand confirmed it had intervened to
cap what it saw as an overvalued currency.