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FOREX-Dollar falls vs euro, as Fed hike view undermined

Published 06/17/2009, 08:47 PM
Updated 06/17/2009, 08:56 PM

* Dlr hurt after S&P's broad downgrade on U.S. banks

* Yen-selling flows from Japan investment trusts eyed

By Satomi Noguchi

TOKYO, June 18 (Reuters) - The dollar fell against the euro on Thursday to hover near lows struck the previous day after price data reduced expectations for a Federal Reserve interest rate hike in the near term.

The dollar fell versus most other major currencies on Wednesday after an unexpectedly small rise in U.S. inflation and on a debt ratings downgrade for U.S. banks by Standard & Poor's.

But the rating agency also said the United State's top AAA credit rating is unlikely to come under pressure in the near term.

Traders said that the current trend of investors reversing bets placed on hopes for a recovery in the global economy was still in place and would provide support for the the greenback.

The euro rose 0.1 percent from late New York trade on Wednesday to $1.3952, near the previous day's high of $1.3986 on trading platform EBS.

The euro rose 0.1 percent to 133.66 yen, above a three-week low of 132.37 yen hit the previous day.

The dollar was nearly flat at 95.76 yen, off Wednesday's low of 95.51 yen, the lowest in two weeks.

The yen was broadly weaker in early trade as short-term speculators were cautious about yen-selling from Japanese retail investors, traders said.

Data showed that a Japanese investment trust investing in Chinese stocks launched this week had gathered its maximum amount of funds, they said. (Editing by Edwina Gibbs)

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