TOKYO: The yen dipped against the dollar on Thursday in a knee-jerk reaction to data showing Japan's current account swung to a record deficit in January, while the Australian dollar fell on a weak jobs report that kept alive expectations of a rate cut.
Short-term players sold the Japanese unit after Tokyo posted its first current account deficit in three years. It came in at 437.3 billion yen ($5.41 billion) in January, above market estimates of 317.8 billion yen.
The current account took a hit as a shift away from nuclear power pushed up fossil fuel imports and it was particularly badly hit in January because Chinese Lunar New Year weighed on exports. Economists see it as a one-off figure and expect the annual current account to remain in surplus for the next few years.
The dollar strengthened 0.2 percent against the yen to 81.20 with traders saying the pair's bob above resistance on hourly charts added to the upward momentum.
"The dollar gained in a headline-driven speculative move," said Sumino Kamei, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.
"The current account deficit, even if a bit above market expectations, was widely expected, so I wouldn't read too much into this move. No one really wants to make aggressive bets ahead of Friday's US jobs data and the Greek deal outcome," she said.
The dollar has gained nearly 6.5 percent on the yen since the end of January, before getting stuck in the band of 81.87-80.50, formed by this year's high and the 23.6 percent retracement of its February rise.
MAKING PROGRESS
The euro recovered from a three-week low below $1.31 touched the day before as Greece's debt restructuring efforts looked to have made some progress after a group of major banks and funds said they would take part in the swap.
Data showing the pace of job creation by US private employers picked up in February supported risk sentiment, bolstering the single currency and global bourses ahead of the all-important US non-farm payroll jobs figures on Friday.
The euro bounced off the Wednesday trough of $1.3096 to $1.3142, coming roughly in line with late New York levels. Support for the common currency is seen around $1.3077, at the 55-day moving average.
The private sector added 216,000 jobs last month, the ADP National Employment Report showed, topping economists' expectations for a gain of 208,000.
Friday's data is expected to show a gain of 210,000 in nonfarm payrolls.
A Wall Street Journal report suggesting Fed officials were considering buying longer-dated bonds and sterilizing the money flow by draining funds in the banking system was also positive for riskier assets.
Still, the overnight moves were relatively mild with many players holding back for the outcome of Greece's bond swap offer to private creditors and the European Central Bank policy meeting later on Thursday.
But "any suggestion the deadline might be extended would probably send shivers down the spine of any 'risk-on' traders and EUR would like suffer badly," BNP Paribas analysts warned.
The Aussie slipped to $1.0565, from the session high of $1.0591 after Australian employment suffered an unexpected drop of 15,400 in February, nudging the jobless rate up a tick to 5.2 percent.
Support at the top of the Ichimoku cloud at $1.0497, a break would see a test of key support around $1.0400-10, the 38.2 percent retracement of the $1.9664-1.0857 move and the 200-day moving average.
The New Zealand dollar also suffered a slight setback after the country's central bank said the currency's strength could lessen the need for higher interest rates.
"The tone of today's Monetary Policy Statement was more dovish than we expected and we now forecast interest rates to remain on hold until Q4 2012," Barclays Capital analysts wrote in a note.
The kiwi was at $0.8156, down from $0.8202 marked late in New York. Still, it steered well clear of a six-week low of $0.8101 earlier in the week.
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