The euro eased against the dollar on Thursday but was broadly unmoved after the European Central Bank kept policy unchanged as expected, while the yen fell as risk sentiment was buoyed by a robust Australian jobs report. The ECB kept its main interest rate on hold at a record low of 1 percent for the eighth month running.
It also left its overnight deposit rate, which acts as a floor for money markets, at 0.25 percent and its marginal lending rate at 1.75 percent. The euro was little changed after the decision at $1.4484, down 0.2 percent on the day, after hitting a one-month high of $1.4582 on Wednesday, according to Reuters data.
"Risk is on, but selectively. Greek spreads are still widening out and the market is waiting to see what the ECB says," said Geoffrey Yu, currency strategist at UBS. ECB President Jean-Claude Trichet will hold a news conference at 1330 GMT, with the focus on further clues to the central bank's strategy for withdrawing its extraordinary stimulus for the economy and comments about Greece.
The spread between Greek and German government bonds widened and Greek credit default swaps hit a record high on Thursday even as the Greek government presented parts of a three-year plan to slash its budget deficit. "A lot of people are very cautious about the fiscal situation in Greece," said Niels Christensen, currency strategist at Nordea in Copenhagen.
The euro was little affected by data showing euro zone industrial production rose 1.0 percent on month in November, higher than forecasts for a 0.5 percent increase. Traders were watching whether the euro would hold above resistance around $1.4570, a 38.2 percent Fibonacci retracement of the December high of $1.5142 to the December low of $1.4218. Next resistance for euro/dollar would be a 50-percent Fibonacci retracement at $1.4680, they said.
The yen sagged as investors chased riskier assets, with European shares climbing after gains in Asia and on Wall Street overnight. The dollar rose 0.3 percent to 91.67 yen while the euro gained 0.2 percent to 132.86 yen. The Australian dollar rose 0.8 percent to 85.19 yen. It also hit a two-month high versus the US dollar after data showed Australia's jobless rate at an eight-month low, adding to the case for higher interest rates.
The Australian dollar was up 0.5 percent at $0.9289 after hitting $0.9331, close to the 2009 high of $0.9407. Investors awaited US retail sales for signs of how US domestic demand fared over the Christmas period, as well as weekly jobless claims data at 1330 GMT.
The dollar index edged up 0.1 percent to 76.961 with support seen at the 100-day moving average near 76.50. Focus is also on US corporate earnings, with results from Intel Corp and J.P Morgan Chase due out this week. Sentiment towards the US dollar was knocked earlier by New York Federal Reserve Bank President William Dudley and Chicago Fed President Charles Evans, who said separately the US central bank would need to be certain the economic recovery was firmly in place before tightening policy.
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