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Aussie moves higher on capex numbers, euro steadies

The Australian dollar jumped more than half a percent on Thursday as investors considered whether this week's major currency moves - a rally for the dollar and retreats for the euro and sterling - had further to run.

A holiday in much of Europe thinned out trading, and analysts said a second estimate of U.S. second-quarter growth might prompt more substantive moves among the other majors.

The euro has fallen to a three-month low this week as expectations solidified for a multi-pronged attack on monetary policy by the European Central Bank next week. It was holding steady just below at $1.36 on Thursday.

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The Aussie was driven higher by data on business investment which showed planned spending for 2014/15 jumped to A$137 billion, from an earlier estimate of A$125 billion, overshadowing a dip in such spending in the first quarter.

By midday in Europe, the Aussie was up 0.65 percent near $0.93. The currency has held between longer-term support around $0.92 and its 21-day moving average at $0.93 for the past two weeks. Dealers said it may struggle to break out of that range in the near future.

Both the pound and the euro recovered a foothold after falling through barriers respectively at $1.36 and $1.67 in the previous session.

For sterling, one of the past year's big winners, the fall this week has led some to wonder whether its rally against the dollar has peaked. Thursday's pause underlined the fact that the jury, for many, is still out.

The pound traded roughly flat at $1.67 and just 0.2 percent above 81 against the euro.

Dollar solid

The dollar index fell around 0.2 percent to almost 80.44 drifting lower from Wednesday's two-month high above 80.58.

The U.S. currency's gains in the past week have come in spite of another slide in U.S. Treasury yields, but another 5-basis point dip in 10-year rates on Wednesday were enough to halt the rally.

Still, expectations of policy action from the ECB have been mounting - a key reason for the recent underperformance in the euro. A Reuters poll of 48 economists showed a clear majority expect the ECB to cut its deposit rate into negative territory next week, a view reinforced for many in the market by policymakers' comments this week.

—By Reuters

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