* Yen retreats a touch, still on track for best week in a month
* Euro inches higher, Greek deal underlines supportive flows
* Dollar index heads for biggest weekly fall in 9 months
* Aussie down 0.4 percent
By Patrick Graham
LONDON, April 11 The yen fell back a third of a percent against
the dollar on Friday but remained on track for its best week since the start of
March as a slump in confidence in U.S. stock markets sent investors scurrying
for traditional safe havens.
The Australian dollar, one of the commodity-linked currencies often seen as
a proxy for optimism over the global economy, fell almost half a percent
overnight as the Nasdaq U.S. tech stocks index saw its biggest daily loss since
Dealers and strategists also pointed to a number of other risks, ranging
from signals that China and Japan will be very cautious at best with the
provision of any further stimulus to their economies to worries over supplies of
Russian gas to Europe.
"There are a variety of factors that have weakened the mood but the fall-off
in tech stocks is probably the main one," said Jane Foley, a currency strategist
at Rabobank in London.
"U.S. jobs data yesterday were very strong but there is the perception that
some stocks have been overbought."
The dollar traded almost 0.3 percent higher at 101.80 yen, up from
this week's trough of 101.32 earlier in the session but still down around 1.5
percent this week.
The euro also inched up against the dollar to its highest since mid-March,
within half a cent of this year's highs. It traded slightly higher at $1.3894 by
The single currency's resilience has been a surprise to many in markets
after a European Central Bank policy meeting last week appeared to show it on
the verge of the outright money-printing from which it has shied away over six
years of ultra-loose monetary policy.
That it has not weakened in response seems in part due to broader flows of
money into Europe. Greece's first sale of bonds since its EU and IMF bailout
underlined how capital has returned to the euro zone's still struggling southern
half. Orders for the sale topped 20 billion euros.
The data out of Europe, however, remains grim. Data on Thursday showed Greek
consumer prices fell 1.3 percent last month and they are also falling in annual
terms in Spain and Portugal. ECB President Mario Draghi, speaking in Washington
restated the ECB's view that much of the falloff in inflation is due to
supply-driven falls in food and energy prices rather than simply poorer demand.
"That the euro has risen recently without much resistance shows that dollar
weakness is leading current currency trends," said Masashi Murata, senior
currency strategist at Brown Brothers Harriman in Tokyo. "Under normal
circumstances the market would not be ignoring hints from the ECB that the euro
is too high."
The dollar index last stood at 79.411, down about 1.2 percent so far
this week. If sustained, this will be its biggest weekly fall in nine months.
The index is now back at levels seen before March 19 when Fed Chair Janet
Yellen hinted at the possibility of an interest rate hike as soon as early next
year. Minutes from the Fed's March meeting released mid-week appeared to have
driven home the message that the U.S. central bank is nowhere near tightening,
even as it has begun to unwind its bond-buying stimulus.
(Additional reporting by Ian Chua in Sydney and Shinichi Saoshiro in Tokyo;
Editing by Alison Williams)