* Investors focus on U.S. jobs data, ISM
* Dollar hits another 5-year high versus yen
* Euro falls after asset quality snapshot
By Laurence Fletcher
LONDON, Jan 2 The dollar rose against the euro
and the yen on Thursday with investors focused on whether U.S.
economic data will support the case for the Federal Reserve
gradually scaling back its bond-buying stimulus this year.
The euro - the strongest-performing major currency in 2013
but historically a weaker performer at the start of a calendar
year - dropped 0.6 percent to $1.3665.
The U.S. currency hit another five-year high of 105.45 yen,
its strongest level versus the Japanese currency since October
2008, and was last trading up 0.2 percent at 105.41 yen.
Dollar/yen stayed in a narrow range, with Japanese financial
markets closed on Thursday and Friday for the New Year's break.
Volumes were low in late December and prices driven by
factors such as euro zone banks repatriating funds to shore up
their capital bases before the European Central Bank's year-end
review of their assets, which supported the euro.
Traders will closely watch U.S. weekly jobless claims and
the Institute for Supply Management's index of national factory
activity later on Thursday for indications of the strength of
the U.S. recovery.
"Last week the market was mainly determined by position
rescaling," said Ulrich Leuchtmann, head of currency research at
Commerzbank in Frankfurt.
"Today is the first day where fundamentals work out again
... That's why there is pressure on euro/dollar."
While few analysts expect the ECB, which holds a policy
meeting next week, to change interest rates in the near future,
the Federal Reserve is closely monitoring the strength of the
U.S. recovery to gauge the pace at which it scales back its
"The sensitivity to surprises in data in the euro zone is
much lower than the sensitivity to surprises in the data in the
U.S." Leuchtmann said.
The Fed said in December that it would trim its monthly
asset purchases by $10 billion to a total of $75 billion per
month from January.
Germany's manufacturing PMI for December came in marginally
above expectations at 54.3 on Thursday, while the euro zone
manufacturing PMI was in line with forecasts at 52.7. Readings
above 50 indicate expansion.
But it offered little sustained support for the single
currency, which was down 0.5 percent against the yen at 144.08
"Over the last 20 years there's been a relatively strong
tendency for the euro to fall and the dollar to rise in
January," said Anders Soderberg, chief technical analyst at SEB
In thin volumes the dollar rose 2.3 percent against the
Norwegian crown to 6.1549 crowns, recovering ground it
lost earlier this week.
The Australian dollar was down 0.4 percent at $0.8849
after official Chinese data released on Wednesday
underscored the view that the world's second-largest economy
lost some momentum in late 2013. China is Australia's top export
A separate private survey released on Thursday showed
China's factory activity expanded at the slowest pace in three
months in December.