FOREX-Dollar broadly rises as markets poise for strong U.S. data
* Dollar rises against currency basket
* Retail sales, other U.S. data this week could lend support
* Drops then recovers against yen after disappointing Japanese growth data
LONDON, Aug 12 (Reuters) - The dollar rose on Monday on expectations of strong U.S. data that could signal an early scaling back of the Federal Reserve's monetary stimulus. It rose 0.3 percent to 81.408, moving away from a seven-week low of 80.868 hit last week. The dollar gained against the safe-haven yen as traders moved back in at lower exchange rates. The dollar had initially weakened following disappointing Japanese growth data that prompted investors to trim their exposure to risk.
The U.S. currency rose 0.4 percent to 96.72 yen, also pulling away from a seven-week low - of 95.81 yen - set last Thursday. An option expiry was reported at 96.00 yen. Market players said the near-term outlook for the dollar would hinge on U.S. data due this week, such as Tuesday's retail sales reading which they said was expected to be strong.
"We foresee U.S. data slightly above expectations and so we expect a stronger dollar," said Lutz Karpowitz, currency analyst at Commerzbank. "Markets are focussed on the timing aspect of Fed tapering and the chances are pretty good that the dollar weakness we saw over most of last week will not return." The dollar slipped against the yen earlier on Monday after data showed Japan's economy grew an annualised 2.6 percent in April-June, a third straight quarter of expansion but slower than expected. The dollar bounced back after running into bids near 96.00 yen as buyers emerged at lower levels. The value of the dollar's net long position fell to $21.62 billion in the week ended August 6 from $24.45 billion, dropping for the third straight week as speculators continued to pare bets in favour of the currency. Dealers said that trend could be about to slow or end. Analysts added the yen, which usually attracts buyers in times of markets stress, could gain if Japanese stocks continue to fall on poor economic data. But some strategists warned this could weigh on the yen if it persuaded the country's central bank to loosen policy. "If data is disappointing in Japan then there is more room for policy response by the BOJ and that would be yen negative," said Chris Walker, FX strategist at Barclays Capital adding they forecast the dollar at 98 yen in one month. The euro was down 0.2 percent to $1.3308. Support was cited around $1.3269, the 61.8 percent Fibonacci retracement of the July 2-8 uptrend. The single currency was under pressure after German news magazine Der Spiegel reported on Sunday the Bundesbank was warning Greece would need more financial assistance by early next year. Data on Monday showed the Greek economy, which was facing its sixth consecutive year of recession in 2013, had shrunk at 4.6 percent in the second quarter.