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CORRECTED-FOREX-U.S. dollar weakens as stocks, commodities rise

Published 09/11/2009, 03:11 PM
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(Corrects in lead to fifth straight session from fourth)

* Euro hits fresh 2009 high, dollar index near 1-year low

* Strong U.S. 30-year auction boosts risk appetite

* BoE holds quantitative easing, rates steady

* U.S. weekly jobless claims fall (Updates prices, adds comment)

By Gertrude Chavez-Dreyfuss

NEW YORK, Sept 10 (Reuters) - The U.S. dollar fell for a fifth straight session on Thursday, hitting its lowest level in nearly a year against major currencies, as gains in stocks and commodities prompted investors to wade into riskier currency trades.

The dollar's sell-off also propelled the euro to a fresh 2009 high according to Reuters data, and sterling to a one-month peak.

A surprisingly well received U.S. 30-year Treasury debt auction further lifted the market's optimism, dousing concerns about financing the country's gargantuan debt.

Foreign and institutional investors further showed strong appetite for U.S. debt, accounting for nearly 47 percent of sales. For full story see [ID:nN10394929].

"All of the indicators seem to suggest risk aversion is in decline," causing dollar weakness, said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Connecticut.

The safe-haven dollar has struggled in recent sessions as investors bet on an economic recovery, with market participants buying commodity-linked and higher-yielding currencies, which rallied this week.

"With dollar Libor down where they are, we're kind of back to normal. Funding pressures are down and you've got people more optimistic about the stock market." While such an upbeat view of the world may be premature, Wilkinson said the market's inclination for now is to buy risky assets.

In late afternoon trading, the euro rose 0.2 percent to $1.4582 after climbing to $1.4613, its highest since December 2008. The euro zone's single currency also gained earlier after data showed the number of U.S. workers filing new claims for jobless benefits fell to 550,000 in the latest week, more than expected. [ID::nN10384112]

"We're back pedal to the metal, selling dollars until $1.4650 in euro/dollar," said Steven Butler, director of currency trading at Scotia Capital in Toronto. "The markets are feeling a little bit more comfortable again and looks like we're poised for another run at the topside in the euro."

The ICE Futures' dollar index <.DXY>, which tracks its performance against a basket of six other major currencies, fell 0.4 percent to 76.795. The index earlier touched 76.699, its lowest since late September.

The dollar's losses came as Wall Street stocks rose. The S&P 500 <.SPX> ended the day up 1.0 percent, while gold, which has been on a tear this week, remained near $1,000 per ounce . U.S. crude futures, meanwhile, rose 1.2 percent at $72.15 per barrel .

Against the yen, the dollar was down 0.4 percent at 91.69 yen after hitting a seven-month low of 91.45 yen earlier, according to Reuters data.

Sterling, meanwhile, rose after the Bank of England left monetary policy unchanged as expected, countering speculation of further easing. The pound hit a one-month high at $1.6677 and was last at $1.6663, up 0.7 percent.

The New Zealand dollar surged 0.9 percent to US$0.7029 after climbing to a one-year high at US$0.7046. The Kiwi dollar has recovered from losses on Wednesday after the Reserve Bank of New Zealand governor said the currency was overvalued. [ID:nWLF004365]

Earlier, the RBNZ left rates on hold at a record low of 2.5 percent as expected but indicated it was less inclined to cut rates again. [ID:nWEL20198] (Additional reporting by Vivianne Rodrigues; Editing by James Dalgleish)

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