FOREX-Dollar back in form as payrolls hangover lifts
* Shakeout complete, dollar index back at pre-payrolls highs
* Data restoring faith in U.S. recovery, CPI next in focus
* Aussie eyes local employment data
By Ian Chua
SYDNEY, Jan 16 (Reuters) - The U.S. dollar traded at a near one-week high against a basket of major currencies early on Thursday, having returned to levels seen before last week's soft payrolls data as faith in the U.S. economic recovery was restored.
Upbeat numbers this week held out hope that Friday's surprisingly soft jobs report was an anomaly and did not signal the economy had lost steam at the end of last year.
U.S. data on Wednesday showed producer prices recorded their largest gain in six months in December, yet there were few signs of any sustained price pressures. The figures came a day after U.S. retail sales rose and a core spending gauge posted a big jump.
Investors were encouraged to go long on the greenback, again betting the Federal Reserve can continue to unwind its massive bond-buying stimulus over 2014. They pushed the dollar index back to the highs seen last Friday.
Against the yen, the dollar bounced to 104.56, within striking distance of a five-year peak of 105.45 yen scaled at the start of the year. Continued...