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FOREX-Dollar rises as U.S. data eases some growth worries

Published 05/05/2016, 02:03 am
Updated 05/05/2016, 02:10 am
© Reuters.  FOREX-Dollar rises as U.S. data eases some growth worries
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* U.S. trade, factory orders data stronger than forecast

* Dollar index rebounds from lowest in over 15 months

* Currency trading lighter than usual due to Japanese holiday (Updates market action, changes dateline, previous LONDON)

By Richard Leong

NEW YORK, May 4 (Reuters) - The dollar rose on Wednesday, rebounding from recent lows against the yen and euro as data on U.S. trade and factory orders eased some worries about the sub-1 percent growth path the world's biggest economy was stuck on in the first quarter.

A surprisingly weak report on private U.S. jobs growth in April and bets the Bank of Japan might not intervene soon to stem yen's rise, on the other hand, could help rekindle further losses on the greenback, analysts said.

The greenback sagged to a near 19-month low of 105.52 yen overnight JPY= and touched its weakest against the euro since last August at $1.1614 EUR= on Tuesday.

"We will see more momentum on the dollar downtrend unless there's a major upward surprise on Friday," said Ray Uy, head of macro research at Invesco in Atlanta, referring to the government's April payrolls report due later this week.

For now, the dollar has stabilized from its recent decline after the government said the U.S. trade gap shrank to its smallest in 13 months in March and factory orders grew 1.1 percent, more than analyst forecasts. the Institute for Supply Management's gauge on U.S. services industry rose to its highest since December.

These figures overshadowed news from payroll processor ADP that companies added 156,000 workers in April, the smallest monthly gain in two years.

The dollar index .DXY which measures the greenback's value against the euro, yen and four other currencies, was up 0.3 percent at 93.242, rebounding from its lowest in more than 15 months on Tuesday.

Greenback's gains against the yen came in thin market conditions, with Japanese markets closed on Wednesday and Thursday for public holidays.

Last week, the yen booked its biggest weekly gain since 2008, which was more than 5 percent against the dollar, as the Bank of Japan held off from expanding its stimulus.

Position squaring ahead of U.S. jobs data due at 8:30 a.m. EDT (1230 GMT) on Friday likely supported the dollar against the yen for now, said Stephen Innes, senior trader for FX broker OANDA in Singapore.

"There's a huge, huge short position built into dollar/yen right now," Innes said.

In the futures market, speculators held $7.5 billion in bets on the dollar falling versus the yen, the second most net dollar/yen shorts going back to August 2012, according to Reuters calculations and data from the Commodity Futures Trading Commission released last Friday.

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