* U.S. dollar helped by trade data
* Canadian dollar at lowest in almost 4 years
* Focus on U.S. jobs data on Friday
By Laurence Fletcher
LONDON, Jan 8 The dollar rose against the yen on
Wednesday as upbeat U.S. trade data the previous day triggered
renewed appetite for riskier assets among global investors.
The Canadian dollar, against which hedge funds have been
betting, dropped versus the U.S. currency after activity by
purchasing managers nosedived unexpectedly in December.
The U.S. dollar rose 0.5 percent to 105.07 yen,
pulling further away from Monday's two-week low of 103.88 and
back towards last week's five-year high of 105.45 yen. One
trader cited options expiring at 105 yen, which could help pin
the Japanese currency at these levels.
The dollar index hit a one-month high of 80.954 and
was last up 0.1 percent on the day at 80.943.
Data on Tuesday showing the smallest U.S. trade deficit in
four years, as exports hit a record high, lifted the dollar. At
the same time, global stocks rose, indicating the greater risk
appetite that is usually a sign to sell the yen.
However, investors were looking to Friday's U.S. jobs
report, and to minutes from the Federal Reserve's December
meeting later on Wednesday, for clues to how quickly the U.S
central bank will cut back on its huge bond-buying programme.
"The market is still residual bullish dollar/yen but it's
still shy of its highs (last week)," said Ian Gunner, portfolio
manager at Altana Hard Currency Fund.
"People who are sceptical of this move will think it's
entirely consistent with a topping out process (where the
currency fails to break through a previous high and falls)."
Investors dumped the Canadian dollar after Tuesday's PMI
data and a bigger-than-forecast trade deficit.
That lifted the U.S. dollar to C$1.0825 <CAD=D4, its highest
since May 2010. It was last up 0.5 percent at C$1.0816.
Comments by Bank of Canada chief Stephen Poloz that it
should keep its key interest rate on hold until data persuaded
it otherwise also weighed on the currency.
U.S. jobs data on Friday is expected to show the world's
biggest economy created 196,000 jobs in December, according to
analysts polled by Reuters.
Fed officials have been careful to play down the possibility
of accelerated stimulus tapering. Boston Fed President Eric
Rosengren and San Francisco Fed President John Williams said on
Tuesday they expected the U.S. central bank to reduce stimulus
at a steady pace.
Altana's Gunner added, "A lot depends on what payrolls
numbers say on Friday. People will be wary of being sucked in
The dollar pared earlier losses against the euro, with the
single currency down 0.1 percent at $1.3604.
The European Central Bank meets on Thursday and is likely to
do no more than warn of its readiness to act despite another
surprise fall in euro zone inflation.