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FOREX-Euro hits 1-yr high vs dollar; yen bounces

Published 09/17/2009, 05:01 AM
Updated 09/17/2009, 05:03 AM
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* Euro hits 1-year peak of $1.4768

* Gain in equities, commods seen keeping dlr down

* Yen bounces after BOJ's Shirakawa comments (Recasts, adds quotes, updates prices, changes dateline, pvs TOKYO)

By Tamawa Desai

LONDON, Sept 17 (Reuters) - The euro hit a one-year high against the dollar on Thursday as equities and commodities advanced on expectations of economic recovery, putting pressure on the greenback.

European stocks tracked Asian equities and Wall Street higher after data on Wednesday showed U.S. industrial production rose more than expected in August, boosting sentiment towards riskier assets and eroding the dollar's safe-haven appeal.

The euro rose as high as $1.4768 on trading platform EBS, its highest since mid-September last year. By 0754 GMT, it was up 0.2 percent at $1.4740.

Many expect the uptrend to remain intact.

"We are likely to see more gains in euro/dollar on the back of equities and gold performing higher," said Geoffrey Kendrick, currency analyst at UBS.

The euro has gained more than 2.5 percent this month, riding improved investor confidence and expectations U.S. rates are likely to stay at rock bottom for some time.

But some in the market say the recent rally could encounter profit-taking, with orders seen around $1.4770/80.

Traders also cited options with a strike price around $1.4760 set to expire later in the day.

Gold rose to a new 18-month high in Europe on Thursday, within a stone's throw of its record peak of $1,030.80 an ounce.

The yen got a slight boost after Bank of Japan Governor Masaaki Shirakawa said on Thursday a stronger yen would push down prices in the near term but might support the economy in the longer run.

The central bank chief added he would carefully monitor the impact of currency moves on the economy and that rates should be formed in a stable manner in the market.

The dollar was last at 90.58 yen, down 0.3 percent on the day, from around 90.90 yen before the remarks. It hit a seven-month low of 90.12 yen on EBS on Wednesday.

"It's similar to what the MOF (Ministry of Finance) said the day before, but enough to knock 20-30 ticks from dollar/yen," UBS's Kendrick said.

The yen gained the previous day after Japan's new finance minister said currencies were not moving rapidly and that he opposed currency intervention as long as market moves were moderate.

Options with a strike price between 90.30 yen and 91.00 yen were seen expiring later in the day.

The BOJ kept interest rates on hold at 0.1 percent, as widely expected, and markets showed little reaction to the central bank upgrading its economic assessment.

The U.S. currency's weakness was reflected in the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies.

It was last at 76.049, down 0.2 percent. It had struck a one-year low of 76.010 earlier.

The Australian dollar rose to $0.8776, its highest since August last year, with next targets seen at $0.8813 and then $0.8907. It was last up 0.3 percent at $0.8755.

The New Zealand dollar also rose to a 13-month high of $0.7159 earlier in the day. It was last up 0.1 percent at $0.7137.

The Swiss franc hit a one-year high of 1.0281 to the dollar ahead of a scheduled Swiss National Bank policy meeting, with a decision to be announced at 1200 GMT. The central bank looks set to stick to its ultra-loose monetary policy asit worries about the threat of deflation.

The SNB is also expected to continue seeking to prevent the franc rising.

(Additional reporting by Satomi Noguchi in Tokyo, editing by Nigel Stephenson)

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