FOREX-Dollar claws back ground lost on retail sales disappointment

* Dollar was softer across the board after retail sales data

* Sales post biggest monthly drop in 11 months in Dec

* U.S. yields rebound from overnight lows, bolstering USD

* Aussie surges as strong jobs data curbs rate talk

By Lisa Twaronite and Ian Chua

TOKYO/SYDNEY, Jan 15 (Reuters) – The dollar edged up in Asian trade on Thursday, regaining some ground lost overnight after a surprisingly big fall in U.S. retail sales.

The greenback added about 0.2 percent to 117.59 yen, after skidding as low as 116.07 yen on Wednesday, a level last seen on Dec. 16.

Investors took some profits on long dollar positions after retail sales posted their largest decline in 11 months in December, which led some to bet that the Federal Reserve’s first interest rate hike this year could come later than expected.

The downbeat data pushed the benchmark U.S. 10-year yield to a 20-month trough of 1.784 percent, while the 30-year yield touched an all-time low of 2.395 percent.

But in Asian trading, the 10-year yield rebounded to 1.872 percent, compared with Wednesday’s U.S. close of 1.835 percent. The 30-year yield rose to 2.478 percent from its U.S. close of 2.451 percent.

While the market lacks clarity on the timing of the Fed’s hike, a hike is widely expected around mid-year, which will buoy the dollar against rivals from countries whose central banks are on the opposite track.

“There’s no doubt that there’s a continuation from last year that the dollar will continue to strengthen, and the most simply and basic reason is interest rate expectations,” said Bart Wakabayashi, head of forex at State Street in Tokyo.

Bank of Japan Governor Haruhiko Kuroda said on Thursday that the country’s economy is recovering moderately, and that the BOJ will maintain its quantitative and qualitative easing for as long as needed.

“Japan is talking about easing, accommodative monetary policy, whereas the Fed is debating hikes, so it’s very clear-cut and obvious which direction the Fed is going in, and that every else is going the other way,” Wakabayashi said.

Investors will be watching the European Central Bank’s Jan. 22 policy review, amid feverish speculation the bank will launch a large-scale program of sovereign-bond buying.

The ECB on Wednesday won crucial backing for such purchases from a top EU legal adviser, who said a 2012 ECB bond-buying blueprint did not break EU law.

The euro edged down about 0.1 percent to $ 1.1780, not far from Wednesday’s nine-year trough of $ 1.1728.

The dollar held steady on the day against a basket of major currencies, with the dollar index at 92.174, still shy of a nine-year high of 92.528 set a week ago.

Against its Japanese counterpart, the euro inched up about 0.2 percent against the yen to 138.68, up from Wednesday’s 2-1/2 month low of 137.02 but still well below a six-year high of 149.79 set last month.

One standout of the Asian session was the Australian dollar, which logged solid gains against the dollar after strong jobs data led the market to scale back the risk of interest rate cuts in the short-term. The Aussie rose about 0.7 percent to $ 0.8202 .

The economy created 37,400 jobs in December, versus forecasts of a small gain of 3,800, while unemployment dipped to 6.1 percent from 6.2 percent.

“We expect the Reserve Bank to remain on the interest rate sidelines over 2015,” said Craig James, chief economist at CommSec.

The Australian unit, usually used as a proxy for global growth, was initially spooked by a sharp drop in the price of copper, traditionally seen as a barometer for demand.

(Additional reporting by Cecile Lefort in Sydney; Editing by Grant McCool & Kim Coghill)