Australian, Canadian dollars hold gains on crude oil rebound

By Shinichi Saoshiro

TOKYO (Reuters) - Commodity currencies such as the Australian and Canadian dollars on Wednesday held onto gains made on a rebound in battered crude oil prices, while the dollar nudged up against the euro on the back of higher U.S. debt yields.

The Canadian dollar was little changed at $1.3837 against the dollar, having rallied overnight from a low of C$1.3941.

The loonie hit an 11-year low of C$1.4003 to the dollar earlier this month, dogged by weak prices of oil, Canada's main export, and the dollar's relative strength against other currencies.

The Australian dollar was steady at $0.7292 after rising to $0.7303 overnight, its highest since Dec. 10.

"Towards the end of the year, the U.S. dollar lost momentum and the market found new appetite for high yield currencies," wrote Kathy Lien, managing director at BK Asset Management.

"The Reserve Bank of Australia and New Zealand who cut interest rates earlier in the year also expressed optimism about their economies, leading investors to believe that they were done easing."

Oil prices jumped overnight as colder weather in North America encouraged buyers, but traders said prices remained under pressure due to slowing global demand and abundant supplies from OPEC members. U.S. crude dipped early on Wednesday, handing back some of the previous day's 3 percent gain.

The dollar index stood at 98.222, not far from a one-week peak of 98.413 touched on Tuesday. The euro was almost flat at $1.0932 after slipping 0.4 percent overnight. A weak five-year auction and bounce in oil prices pushed U.S. Treasury yields higher on Tuesday, favouring the greenback.

The dollar was flat at 120.49 yen , moving within a tight 120.63-120.17 range so far this week.

(Editing by Richard Borsuk)