* Dollar hits 14-yr high overnight on upbeat US ISM factory
* But dollar pulls back on profit taking, caution before
By Shinichi Saoshiro
TOKYO, Jan 4 The dollar pulled back slightly on
Wednesday after reaching a 14-year peak overnight as investors
sold into the rally to book profits, with the market looking to
consolidate before the highly anticipated U.S. jobs report due
The euro was up 0.1 percent at $1.0416 after hitting
a 14-year trough of $1.0340 overnight in reaction to the
Institute for Supply Management (ISM) numbers, which showed U.S.
factory activity accelerated to a two-year high in December.
Against the Japanese yen the greenback was down 0.2 percent
at 117.540 after surging overnight to a near three-week
peak of 118.605.
The dollar index against a basket of major currencies
was at 103.13 after climbing to 103.82 the previous day, its
highest since December 2002.
"The problem is that the run-up to the Fed's first rate hike
in a year is now over and while policymakers have signalled
plans to raise rates three more times this year, the dollar's
sharp rally last quarter invited profit-taking," wrote Kathy
Lien, managing director of FX Strategy for BK Asset Management.
"There are also concerns about how strong Friday's non-farm
payrolls report will be."
U.S. Treasury yields, which spiked the previous day in
reaction to the robust data, came off their peaks by Tuesday's
close to temper the dollar's rally.
Benefiting from the dollar's broad pullback, the Australian
dollar was up 0.2 percent at $0.7234. The Aussie was
already on a steady footing after being buoyed the previous day
after data which showed China's factory activity picked up
faster than expected.
The New Zealand dollar was up 0.1 percent at $0.6919
The pound stood flat at $1.2240 after stooping
overnight to a two-month low of $1.2200.
(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)