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FOREX-US dollar falls vs Aussie, Canada; yen down broadly

Published 04/20/2010, 12:54 PM
Updated 04/20/2010, 12:56 PM
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* U.S. earnings outperform, stoke risk appetite

* German ZEW sentiment index surges

* Euro pressured vs dlr on concerns about Greece

* Hawkish RBA, BoC boost Aussie, Canadian dollars (Adds quote, updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, April 20 (Reuters) - The U.S. dollar slipped against high-yielding currencies such as the Australian dollar on Tuesday, while the yen fell as global risk appetite improved after robust first-quarter U.S. earnings led by Goldman Sachs and expectations of rate increases in Australia and Canada.

Goldman Sachs , charged with fraud by the Securities and Exchange Commission last Friday, beat market expectations on Tuesday, reporting first-quarter earnings that nearly doubled to $3.29 billion [ID:nN20251740]. That knocked the yen off three-week highs versus the dollar hit on Monday.

"The (earnings) reports are suggestive of a steady return to some semblance of organic growth in the U.S. and the global economies," said Jacob Oubina, senior currency strategist, at Forex.com in Bedminster, New Jersey.

"Overall (stronger) risk appetite elicited weakness in the yen against the dollar and euro and gains in the likes of the Aussie and Canadian dollar," he added.

The low-yielding dollar and yen tend to weaken when market sentiment is upbeat as investors seek currencies with higher returns.

In midday New York trading, the U.S. dollar fell against commodity-linked currencies such as the Australian dollar.

The Australian unit was boosted across the board by a hawkish tone to the minutes of the Reserve Bank of Australia's April meeting. The RBA said a coming boom in export earnings meant it could not delay a hike in interest rates. [ID:nSGE63J001].

The Australian central bank's statements led some investors and analysts to bet it may raise rates yet again by another 25 basis points as early as May.

The Australian dollar rose 0.7 percent against the greenback to US$0.9307 .

Against the yen, the U.S. dollar rose 0.9 percent to 93.26 yen . The euro also gained versus the yen to 125.38 , up 0.6 percent.

The yen also fell on the crosses, with Aussie/yen rallying 1.5 percent to 86.84 and sterling/yen rising 1.1 percent to 143.34.

The euro, however, fell 0.3 percent against the dollar to $1.3442 , after rising to session highs following a German ZEW institute's April economic sentiment index, which came in strongly above forecast. [ID:nDEP003302].

Concerns about Greece continue to dog the euro.

European Central Bank Governing Council member Axel Weber said Greece may require assistance of up to 80 billion euros to avoid default, according to a report in the Wall Street Journal on Tuesday. [ID:nLDE63J05P]

That amount would be far larger than the 30 billion euro aid mechanism agreed by euro zone finance ministers earlier this month.

The Canadian dollar, meanwhile, rose 1.6 percent versus the U.S. dollar at C$0.9983 after the Bank of Canada signaled it will raise interest rates soon, possibly as early as June.

Traders said the market has fully priced in a rate hike at the June meeting and has also factored in a 50 basis-point increase in July.

"It is clear that the bank has determined that the conditional commitment was not as sacred as the market had once imagined, and is instead paying tribute to the undeniable economic reality in Canada of robust economic growth and surprisingly high inflation," said Eric Lascelles, chief Canada macro strategist, at TD Securities in Toronto. (Editing by Dan Grebler)

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