* Singapore widens trading band for Singapore dollar
* Euro rises 0.9% to an 8-½ month high
* Yen hits 15-yr peak, getting closer to record high
By Hideyuki Sano
TOKYO, Oct 14 (Reuters) - The dollar marked a 10-month low against a basket of currencies on Thursday, coming under broad selling pressure after Singapore widened the trading band of the Singapore dollar, letting its currency hit a new record high.
The Australian dollar, which boasts the highest yield among major currencies, soared to a fresh 28-year peak near parity against the U.S. dollar as investors continued to dump the greenback, expecting the Federal Reserve to start further money-printing next month.
"The dollar's declining trend is intact. As the Fed will flood the markets with dollar cash, the dollar is weakening while funds are flowing to shares and any other asset markets," said Tsutomu Soma, senior manager of foreign securities at Okasan Securities.
The dollar index fell 0.7 percent to a 10-month low of 76.519, falling below its January low around 76.60. Its next target is seen at 75.95, the trendline from its two major lows in July 2008 and in November 2009.
The euro jumped 0.9 percent to $1.4086, after rising as far as $1.4095, its highest in more than eight months, and surging above resistance at $1.40, which the currency failed to break in the previous session.
The Australian dollar, with its high yield and the economy's link to commodities, also advanced as many traders saw a rise to parity with the U.S. dollar as just a matter of time.
The Australian dollar gained more than 0.7 percent to $0.9983, its highest in 28 years, bringing its year-to-date gains to 11.3 percent. It has risen 23.8 percent from its low in May.
Some resistance is expected at $1.000, where option barriers are said to lie, although many think the Aussie is set to hit parity soon given the overwhelming weakness in the U.S. dollar.
Traders said selling in the greenback picked up momentum after the Monetary Authority of Singapore (MAS) widened the trading band for its currency.
On top of this move, MAS also said it would maintain the modest and gradual appreciation in the Singapore dollar. It sets policy by managing the Singapore dollar in a secret trade-weighted band against a basket of currencies, instead of setting interest rates.
The U.S. dollar fell 0.7 percent against the Singapore dollar to S$1.2937. The U.S. dollar briefly touched a record low of S$1.2888.
"Singapore raised its currency more than expected. That has opened the possibility of more strengthening in Asian currencies, including China, ahead of the G20 meetings," said Hideaki Inoue, forex manager at Mitsubishi Trust Bank.
Group of 20 finance ministers will meet next week in South Korea on Oct. 22-23, which will be followed by a G20 summit meeting on November 11-12.
"I'm also keen to see what the Chinese communist party committee will discuss at its meeting from tomorrow," Inoue added.
The dollar also fell 0.6 percent against the Japanese yen to hit a fresh 15-year low of 81.28 yen, despite constant wariness about Japanese intervention, edging closer to its record low of 79.75 hit in April 1995.
While traders think Japan could intervene to keep the yen in check at any moment, some market participants speculated that Tokyo may prefer to avoid intervention ahead of G20 meetings.
In a sign that market conviction on quantitative easing is entrenched, participants shruged off comments from Richmond Federal Reserve Bank President Jeffrey Lacker that he would not support more easing if economic conditions remain as they are.
Lacker, generally seen as a policy hawk and not a voter on the FOMC this year, has been suspicious of unorthodox policies and many market players think Fed chief Ben Bernanke is determined to act now to shore up the U.S. economy.
The Canadian dollar, another commodity-linked currency, also rose to a fresh 5-½ month high of C$1.0003 per dollar.
Still, some market players also said that financial markets may have already priced in quantitative easing by the Federal Reserve early next month and that the dollar's decline may soon have run its course.
"Speculators will perhaps start closing their dollar short positions before the next FOMC meeting (on Nov. 3), which could keep the dollar in recent trading ranges in the next few weeks," said Tsutomu Soma, senior manager of foreign securities at Okasan Securities. (Additional reporting by Masayuki Kitano; Editing by Joseph Radford)