* Aussie and kiwi recover from multi-month lows
* Oil, copper, iron ore prices all higher
* Euro, yen and sterling inch down
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Dec 28 The Australian and New Zealand
dollars both recovered against their U.S. counterpart on
Wednesday, helped by a broadly robust tone to stock and
commodity markets heading into the final trading days of 2016.
In trade marked by the absence of most major investors and
skeleton staffing in European bank dealing rooms, the yen, euro
and pound were all marginally lower, pushing the index that
measures the dollar's broad strength 0.1 percent higher.
The Aussie and kiwi both fell to long-term lows last week,
hit by concerns over Chinese growth and victims of the latest
wave of dollar buying since the U.S. Federal Reserve's policy
meeting on Dec. 14.
Prices of the iron ore Australia exports to China have also
weakened in the past month as expectations for Chinese growth
eased but they are still double what they were 12 months ago.
They rose 1.6 percent on Wednesday and the Aussie in turn
was up 0.2 percent at $0.7202 in early trade in Europe.
The kiwi gained half a percent to $0.6928.
While further gains for the dollar are one of the big
consensus plays for major financial investors going into 2017,
there have been signs of more doubt in recent weeks, with
analysts beginning to wonder how much further appreciation a
Donald Trump White House will tolerate.
"While the market collectively may not be focusing on the
story, dollar strength could become a domestic political issue
in 2017 should it persist," said Simon Derrick, chief market
strategist with BNY Mellon in London.
Trump's concern over the rate of the Chinese yuan is well
known, but Derrick also points to similar comments he made
earlier this year on Japan's drive to weaken the yen.
"Should the dollar make substantial gains from here,
particularly against the yen, it will be interesting to see how
president-elect Trump responds given his previous comment," he
The dollar has gained 16 percent against the yen from lows
hit on the night of Trump's election. It gained another 0.15
percent to 117.61 yen on Wednesday after upbeat U.S. economic
data reinforced expectations for economic growth under Trump's
administration and more rate hikes by the U.S. Federal Reserve
"The next data to watch is U.S. payrolls due on Jan. 6,"
said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank
in Tokyo. "Markets are prepared for data showing a strong U.S.
economy but not for the opposite."
Sera added volatility could be high for the yen as Tokyo
trading thins ahead of the Japanese New Year holiday, which
lasts from Dec. 31 to Jan. 3.
(Additional reporting by Yuzuha Oka in TOKYO; Editing by Janet