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FOREX-Dollar hurt by data, Aussie at 3-mth high

Published 08/02/2010, 04:07 AM
Updated 08/02/2010, 04:12 AM

* Dollar index dips to fresh 3-month low

* Aussie rises, yen slips as regional shares climb

* Analysts say better risk sentiment may not last

(New throughout, previous TOKYO)

By Neal Armstrong

LONDON, Aug 2 (Reuters) - The dollar-index hit a three-month low on Monday, hurt by worries that the U.S. economy's recovery is losing steam, while the high-yielding Australian dollar reached a three-month high, buoyed by a rise in Asian equities.

The dollar has been hobbled by concerns over the U.S. economy after a series of recent economic data undershot market expectations, while European numbers and many company results have been stronger -- keeping investors buying riskier assets.

Analysts said the perceived better risk sentiment outside of the United States was unlikely to be maintained if the world's biggest economy continues to underperform.

"We're seeing a disconnection as U.S. data stays weak yet risk appetite is strong. Weak U.S. data will translate into risk aversion at some point," said Tom Levinson, fx strategist at ING.

The dollar index, which measures the greenback's value against a basket of currencies, hit a three-month low of 81.371 , dipping below support near 81.44, which is roughly a 50 percent retracement of its November to June rally.

Next support lies at the 200-day moving average at 80.701.

Latest CFTC positioning data showed the biggest accumulation of net dollar short positions from speculators since December 2009. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For an overview of CFTC FX positioning data, click on

http://r.reuters.com/kus26k ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

At 0740 GMT, the euro was up 0.2 percent from late U.S. trading on Friday to $1.3070, near a three-month high of $1.3107 marked last week.

Key resistance was at $1.3125, the 38.2 percent retracement of the fall from late November to early June, while options traders noted barriers in place at $1.3200, $1.3250 and $1.3300, said to expire from the end of August into early September.

Sterling hit a 5-1/2 month high versus the dollar of $1.5763 and managed to outpace the euro, rising to a 4-week high of 82.81 pence.

AUSSIE RISES, YEN SLIPS

The dollar also fell against the high-yielding Australian and New Zealand dollars, with the Australian dollar hitting a three-month peak at $0.9119.

The Australian dollar was buoyed by gains for Asian equities with MSCI's broad measure of Asia-Pacific shares outside Japan up 1.7 percent.

"It's a very typical pattern we see when investor risk appetite is improving, with the yen and the dollar weakening, while the Australian and New Zealand dollars strengthen," said Junya Tanase, chief FX strategist for JPMorgan Chase Bank in Tokyo.

The yen slipped broadly and pulled back a bit from an eight-month high versus the dollar hit late last week.

The dollar edged up 0.3 percent to 86.75 yen. It had struck an eight-month low of 85.95 yen after U.S. GDP data on Friday showed growth slowed to a 2.4 percent annual rate in the second quarter.

A drop below 84.82 yen on trading platform EBS would take the greenback to its lowest in 15 years against the yen.

With the yen still hovering near last week's eight-month peak against the dollar and getting close to a 15-year peak, Japanese Finance Minister Yoshihiko Noda said on Monday that excessive currency moves are undesirable and can have a negative impact on the economy. (Additional reporting by Masuyaki Kitano; Editing by Patrick Graham)

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