TOKYO (Reuters) - The dollar rose broadly on Monday with the Australian and New Zealand dollars down sharply as speculators covered short positions that had pushed the greenback to one-year lows.
The higher-yielding Australian dollar lost about 1 percent against the dollar as oil prices dropped, denting commodities-linked currencies, traders said.
The dollar's rebound had started with the New Zealand dollar's fall in early trade after soft data showing the country's retail sales dipped unexpectedly in July, traders said.
The yen, however, hit a seven-month high against the dollar in early Asian trade, helped by slides in other major currencies versus the dollar.
Many analysts said Monday's dollar rebound was only a temporary blip in its downward trend, with the greenback recently undermined by falling Treasury yields and the view that it is replacing the yen as the funding currency for carry trades.
Persistent talk of Asian central banks diversifying from U.S. dollars to other currencies and assets, including gold, had also contributed to dollar selling last week.
"A rise in the dollar is nothing more than a technical rebound and the greenback's downtrend is unchanged," said Hideki Hayashi, global economist at Mizuho Securities.
"Given their yield advantages, the Australian and New Zealand dollars will continued to be preferred over the U.S. dollar."
The Australian dollar fell 0.8 percent to $0.8571, retreating from Friday's high of $0.8677, a high of more than one year.
The New Zealand dollar slid 1.4 percent to $0.6981, off Friday's peak of $0.7089, also a high of more than one year.
New Zealand retail sales for July fell unexpectedly for the second month in a row, backing the central bank's view that recovery from recession was patchy.
The dollar index, a gauge for the greenback's performance against six major currencies, rose 0.4 percent to 76.876 .DXY, rebounding from its one-year low of 76.457 hit late last week.
DUE FOR REBOUND
The dollar was seen ready for a broad rebound on short-covering after currency speculators built up huge bets against the greenback to their highest levels since at least mid-July 2008 when the euro hit its record high against the U.S. currency.
The euro slipped 0.2 percent to $1.4541. Traders said hedge funds sold the European currency earlier in the day to book profits on its rally to a 2009 peak of $1.4636 struck on trading platform EBS on Friday.
