* Dollar index falls, awaits Fed statement later in the day
* NZD surges on growth surprise, buoys other majors vs USD
* Wave of stop losses triggered in dlr/yen
By Rika Otsuka
TOKYO, Sept 23 (Reuters) - The ailing dollar fell to a one-year low against a basket of currencies on Wednesday as speculators dumped the low-yielding greenback ahead of a Federal Reserve policy decision later in the day which is expected to keep rates at record lows.
The New Zealand dollar surged to its highest in 13 months against the U.S. currency after the economy unexpected pulled out of recession in the second quarter, fueling expectations the central bank might have to start raising rates sooner than previously thought.
The kiwi
The jump in the kiwi prompted investors to shift more money into other higher-yielding currencies such as the Australian dollar from the U.S. dollar, and helped trigger further speculative dollar selling against other currencies such as the euro and the yen.
"Dollar selling quickly spread to a wide-range of currencies as the dollar resumed its slide the previous day," said Tohru Sasaki, chief FX strategist for Japan at JP Morgan Chase Bank.
"The dollar is vulnerable at the moment as it is around key levels against many currencies, hovering in areas where lots of loss-cut selling orders await," Sasaki said.
But activity soon slowed as Japanese financial markets were closed for a national holiday. Tokyo markets will resume trading on Thursday.
The dollar index <.DXY>, which measures the dollar's value against a basket of six major currencies, slid 0.27 percent to 75.913, off an earlier low of 75.892, a level not seen last September. Charts indicate the next support level at around 74.70.
Data in volatile early trade had shown it fell as low as 75.828 before the initial drop was recalculated.
The dollar index has shed over 2.5 percent this month as speculators sold the dollar on rising confidence in a global recovery and expectations that U.S. policymakers will keep interest rates at rock-bottom levels for some time as the economy struggles to recover.
Those expectations are likely to get a boost when the Fed ends its two-day policy meeting later in the day. Expectations are growing that the Fed will reiterate its intention to keep a super-accommodative policy for an extended period. [ID:nN22350285]
The euro
The dollar fell as low as 90.47 yen on EBS before crawling back to 90.72 yen, down 0.4 percent from late U.S. trade. Dealers said stop-losses were triggered around the 90.90 yen level, making the drop even sharper.
"Regarding the dollar/yen, we thought stops had been cleared out after the pair fell near 90 yen many times last week. But moves this morning showed there were some more out there," said a forex trader at a Japanese bank.
"Also, speculators really want to push down the greenback, even against the (low-yielding) yen," he said.
The dollar fell to a seven-month trough of 90.12 yen last week, nearing the psychologically important 90 yen level.
"Markets are looking very in tune indeed for further gains, all except the U.S. dollar of course, which could be close to a sharp fall," Clifford Bennett, chief economist at Kinetic Securities in Sydney, said in a note.
"The G20 is the fly in the ointment. We need to clear that, which has some risk of strong dollar rhetoric emerging. (The) overall down-trend in the U.S. dollar is likely to persist however."
Leaders at a Group of 20 nations summit later this week are also expected to call for economic stimulus plans to stay in place, a move which could give a boost to riskier assets. [ID:nLM242341]
Some of the largest Western powers rallied support behind a U.S. plan to build a more balanced global economy. Analysts said the U.S. plan, which will be presented at the G-20 summit, would be unlikely to work without further depreciation in the dollar.
Brazil, however, called the plan "obscure" [ID:nN22367535].
The Australian dollar, considered a proxy to global growth,
jumped to a new 13-month high, tracking gains in the New
Zealand dollar and capitalising on U.S. dollar weakness. The
Aussie
The New Zealand dollar stood at $0.7266, up 1.1 percent.
"It is a bit odd that the kiwi is leading the rally in the majors, but it just tells us about the sentiment and the risk reversal that has taken place," said Jonathan Cavenagh, currency strategist at Westpac.
"The broad theme is U.S. dollar weakness, and we must say it is looking ugly technically too." (Additional reporting by Anirban Nag in Sydney) (Editing by Kim Coghill)