FOREX-Dollar near 1-yr low before Fed; kiwi surges

* Dollar index flat at 76.115 <.DXY> after hitting 1-yr low

* Fed likely to indicate rates to stay low for some time

* Stg up as no talk of cutting deposit rate in BoE minutes

* NZD surges on unexpected Q2 growth

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By Tamawa Desai

LONDON, Sept 23 (Reuters) - The dollar was in a holding pattern after falling to its lowest in a year against a basket of currencies on Wednesday, awaiting a U.S. Federal Reserve policy decision expected to keep interest rates at record lows.

The policy-setting Federal Open Market Committee's decision, due around 1815 GMT, was expected to show interest rates would remain low for some time, but may also signal a scaling back in some Fed operations that have provided massive liquidity to the banking system after it seized up a year ago.

"We think the Fed is unlikely to communicate any near-term reversal of its exceptionally accommodative monetary policy," said Geoffrey Kendrick, currency analyst at UBS.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 76.115 <.DXY> by 1228 GMT. It had earlier hit a low of 75.892, a level not seen since last September. Charts indicate the next support level at around 74.70.

The index has shed more than 2.5 percent this month as speculators sold the dollar on rising confidence in a global recovery and expectations U.S. policymakers will keep interest rates at rock-bottom levels for some time.

Ahead of the Fed, minutes from the Bank of England's monetary policy meeting earlier this month showed no members voted for an increase in its asset buying plan and that cutting the remuneration rate on bank's reserve deposits was not discussed.

That prompted sterling to rally to session highs against the dollar and euro, as market players scaled back expectations for more monetary easing in the immediate future.

Sterling rose about half a percent on the day to a session high of $1.6449, jumping a full cent after the minutes were released. The euro fell 0.5 percent to the day's trough of 89.98 pence.

KIWI SURGES

The New Zealand dollar surged to its highest in 13 months against the U.S. currency after the economy unexpectedly pulled out of recession in the second quarter. The kiwi rose to $0.7315, its highest since early August 2008. It was last at $0.7255, up 0.9 percent on the day.

The euro was flat on the day at $1.4780, having risen earlier to a one-year high of $1.4843 on trading platform EBS.

Traders cited talk of a digital option in the euro at $1.48, where the option holder is in line for a payout of 10 million euros if the spot market rate is at that level or higher at the option expiry later in the day.

Higher than forecast purchasing managers' indexes for euro zone manufacturing and services activity [ID:nLN187994] and industrial new orders [ID:nLN636803] had little impact as the market had largely priced in improvement in the sectors, analysts said.

Against the yen , the dollar fell as low as 90.47 yen on EBS before recovering to 91.23, up 0.1 percent on the day.

The dollar fell to a seven-month trough of 90.12 yen last week, nearing the psychologically important 90 yen level.

Traders will also keep an eye on a Group of 20 leaders' summit, which begins on Thursday and is expected to call for economic stimulus plans to stay in place, a move which could give a boost to riskier assets. [ID:nLM242341]

(Additional reporting by Emelia Sithole-Matarise, editing by Nigel Stephenson)