Dollar firmer ahead of Obama's speech

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TOKYO: The dollar was firmer in largely directionless Asian trade on Thursday as the market awaited US President Barack Obama's speech on job creation, and also the European Central Bank's policy meeting.

The euro got a boost overnight after a German court ruling approved eurozone bailouts, giving investors relief amid persistent concern over European sovereign debt, but its impact proved short-lived.

The dollar rose to 77.36 yen in Asian trade from 77.26 yen in New York late Wednesday.

The euro fell to $1.4066 from $1.4096. The European single unit inched down to 108.83 yen from 108.90 yen.

"The dollar is somewhat supported against the yen by upbeat stocks and expectations for Obama's upcoming speech," said Dai Sato, dealer at Mizuho Corporate Bank.

"The market is watching Obama in the hope his speech will bring optimism amid a dearth of other buying incentives. But if the actual plan looks unlikely to gain parliamentary approval or disappoints the market, it could fuel a risk-off mood," Sato said.

In a key speech scheduled later in the day, Obama is expected to announce fresh measures to boost employment and stave off recession.

The new employment initiative will include the injection of $300 billion in the form of tax cuts, infrastructure spending and aid to state and local governments, US media reported.

Such a plan would likely meet with stiff resistance from Republicans, however, setting up a potential repeat of the summer's bitter debt-reduction battle, in which the country came perilously close to a devastating default.

Investor eyes will also be on European Central Bank chief Jean-Claude Trichet's news conference, due Thursday, to follow the central bank's policy meeting, where the ECB is widely expected to keep rates on hold.

Credit Agricole said a speech from US Federal Reserve Chairman Ben Bernanke later in the day will also focus markets for "any clues to whether he is inclined to inject further stimulus into the US economy".

Germany's top court ruled on Wednesday that aid for Greece and rescues for other eurozone countries were legal, throwing out complaints lodged by eurosceptics.

However, the court also said all "large-scale" future aid packages must be approved by the parliament's budget committee, a process sure to create nervousness in markets.

"The ruling gave a temporary boost to the euro but its topside was soon capped," Sato said.

"It avoided the worst case scenario, but the condition given by the court set a higher hurdle for future aid packages and underscored gaps between domestic politics and foreign affairs in Germany," Sato said.

The Swiss franc was mixed following the Swiss central bank's move earlier this week to cap the currency. The euro traded at 1.2081 Swiss francs, down from 1.2095 in New York. The dollar rose to 0.8587 Swiss francs from 0.8579.