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FOREX-Dollar eases towards recent lows, kiwi shines

Published 10/12/2009, 07:10 PM
Updated 10/12/2009, 07:12 PM
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* USD resumes trek lower, higher-yielders strong

* NZD lifted by better-than-expected retail numbers

* Focus on 3rd qtr U.S. earnings

By Anirban Nag

SYDNEY, Oct 13 (Reuters) - The U.S. dollar shifted back to the defensive on Tuesday as investors added to long positions in high-yielding currencies on expectations that robust U.S. earnings would sustain risk appetite.

The New Zealand dollar shined, jumping to $0.7381 from $0.7325 late in New York on Monday, after retail sales data for August beat expectations and fuelled talk the central bank there might soon drop its explicit easing bias. [nWEL117399].

"Contrary to its current promise to keep the cash rate at its current level until late 2010, we suspect the central bank will, albeit reluctantly, begin a tightening cycle by second quarter of next year," said Su-lin Ong, senior economist at RBC Capital.

The numbers gave the high-flying Australian dollar a lift. The Aussie firmed to $0.9074, near 14-month highs, buoyed by higher stocks <.SPX> and commodity prices <.CRB>.

The euro climbed to $1.4782, having gained 0.35 percent on Monday, with resistance seen around $1.4815. On the yen, the euro slipped to 132.57 yen from 132.76 yen late in New York on Monday.

The yen firmed against the dollar to 89.68 from 89.84 late in New York. On Monday, the dollar had risen to as high as 90.46 yen with stops being triggered around 90.30 yen and sellers lining up around 90.50 levels.

The dollar index <=USD> was down at 76.155, not far from its 14-month low of 75.767, struck on Oct. 8. The dollar received a brief reprieve late last week and early on Monday on hopes that U.S. interest rates would move up earlier than expected.

But those expectations fizzled out and investors refocused on U.S. corporate earnings which, if they beat expectations, could boost appetite for high-yielding currencies, analysts say.

Some investors sell the U.S. dollar when economic optimism grows, buying assets like stocks and commodities instead.

Some of the big corporate names scheduled to post earnings this week are Intel Corp and Johnson & Johnson on Tuesday, JP Morgan Chase on Wednesday, and Goldman Sachs and IBM on Thursday. [SP500/WK] [RESF/US]

U.S. economic data this week includes September retail sales and consumer prices as well as industrial and manufacturing numbers. On Tuesday, Federal Reserve Bank of New York President William Dudley speaks at 1715 GMT while Fed Vice President Donald Kohn speaks on the economic outlook at 1745 GMT. (Editing by Mark Bendeich)

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