August 31, 2012 / 3:40 AM / in 5 years

FOREX-Euro near this week's low, markets await Fed action

* Expectations of clear-cut QE3 hint at Jackson Hole dim

* Market jittery on Europe as shares fall

* Yen shows no reaction to weak Japan output data

* Aussie at 1-month low, just above key Ichimoku support

By Hideyuki Sano

TOKYO, Aug 31 (Reuters) - The euro hovered near this week’s low against the dollar in early Asian trade on Friday, as the market nervously looked to whether the U.S. Federal Reserve chief will indicate the possibility of imminent monetary stimulus later in the day.

A fall in European shares to four-week lows are also fraying traders’ nerves after the single currency enjoyed a month-long recovery on hopes of more policy action to counter the debt crisis infecting Europe.

The euro stood at $1.2514, not far from its low so far this week, though it looks likely to end up on the month as hopes that the European Central Bank could start buying Spanish bonds to lower Madrid’s borrowing costs have supported the currency.

But the euro has been unable to rise above its seven-week high of $1.2590 hit last week. Its initial support is seen at $1.2465, this week’s low as well as its tenkan line on the daily Ichimoku chart.

After a brief summer lull this month, the common currency is expected to face a real test from next month, as investors look to whether the ECB’s intervention can help Spain stand on its feet again to finance its debt.

But its fate in the near term is expected to depend on Fed Chairman Ben Bernanke, who will talk about “Monetary Policy Since the Crisis” at 1400 GMT at an annual informal gathering of central bankers in Jackson Hole, Wyoming.

There are expectations he may hint that the Fed will start more asset purchases, dubbed QE3 in markets as that would be the Fed’s third round of quantitative easing, at its next policy meeting on Sept 12-13. But optimism for more stimulus steps to prop up growth have waned lately, market players said.

“Market expectations on his Jackson Hole speech have receded a bit. He is unlikely to give clear signals as recent economic data has not been so bad,” said Yunosuke Ikeda, senior FX strategist at Nomura Securities.

U.S. consumer spending rose by the most in five months in July, data showed on Thursday, while the number of Americans filing new claims for jobless benefits held steady last week.

Atlanta Fed President Dennis Lockhart, seen as a centrist voter on U.S. monetary policy, also said on Thursday that it will be a “close call” when U.S. central bank policymakers meet next month to decide whether to ease policy more.

Against the yen, the dollar slipped 0.2 percent to 78.48 yen due to month-end selling by Japanese exporters, though it stayed within its familiar range of the past week or so.

The yen showed no response to surprisingly weak Japanese industrial output data, which fell 1.2 percent in July despite economists’ expectations of a rise of 1.7 percent.

Still, the data highlighted growing worries about a global slowdown, amid signs that growth in China continues to ease.

One of the victims of China’s slowing growth, the Australian dollar, continued to underperform, hitting a fresh one-month low of $1.0276 on Thursday and last stood at $1.0292. Against the yen it also hit a fresh one-month low of 80.72 yen.

As Australia’s mining boom has been driven by China’s strong appetite for iron ore and other commodities, signs of a sharp fall in demand for these products has put the Aussie under pressure this month.

On the Ichimoku charts, the Aussie is trading just above an important support of the cloud top against the dollar, at $1.0279 on Friday. Against the yen, it already slipped below the cloud-top, which comes at 80.90 yen on Friday.

A decisive break of these levels could strengthen bearish sentiment on the currency.

Below that, one major support is its 38.2 percent retracement of its rise from June to early August at $1.0220.

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