* Dollar index hits 3-year low; euro highest since Dec '09
* Euro may head toward $1.50, Aussie $1.10
* Bank of Japan easing seen possible
(Recasts, updates prices, adds detail)
NEW YORK, April 28 (Reuters) - The dollar fell to a
three-year low against major currencies on Thursday on the
Federal Reserve's intention to keep interest rates near zero,
while softer-than-expected U.S. jobs and growth data
underscored the bearish sentiment.
Ultra-loose U.S. monetary policy has been a bane for the
dollar and a boon for the euro, which is up nearly 11 percent
against the U.S. currency so far this year.
The Federal Reserve said on Wednesday it would complete its
$600 billion bond-buying program in June, but Fed Chairman Ben
Bernanke signaled no rush to tighten monetary policy with the
jobs market still in a "very, very deep hole". For more see
[].
Data on Thursday showed the U.S. economy grew less than
expected in the first quarter and initial weekly jobless claims
rose more than forecast. []
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For graphic on U.S. GDP: http://r.reuters.com/guf39r
U.S. jobless claims: http://r.reuters.com/fuf39r
Fed funds rate hike expectations: http://r.reuters.com/xyz48r
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"The reality is that low short-term U.S. rates for an
extended period are guaranteed, regardless of how the Fed's
language evolves this year, until the Fed starts intervening in
the markets differently," said Lena Komileva, global head of
G10 strategy at Brown Brothers Harriman in London.
There is bound to be a long gap between ending the Fed's
commitment to low rates for an extended period and the eventual
normalization of U.S. rates, which would improve the dollar's
yield advantage against the rest of the world, she said.
"This is a story for 2012 at the earliest."
With few positives seen for the dollar, the euro is on
track toward $1.50, strategists said.
The dollar index, which measures the dollar's value against
a basket of currencies, slid to a three-year low of 72.871 and
was last at 73.106 <.DXY>, down 0.56 percent on the day.
The dollar index has slid around 3.5 percent this month,
bringing it closer to a record low of 70.698 hit in March
2008.
The euro was last little changed at $1.4773 <EUR=>. The
euro hit its highest since early December 2009 after breaching
resistance around $1.4850, the upper part of an uptrend channel
since mid-February.
"It's all one way across the board. Everyone seems to be
betting on a weaker dollar and it seems a pretty safe bet,"
said Niels Christensen, currency strategist at Nordea in
Copenhagen. "The market is taking on board the more dovish
element of the (Fed) statement and the fact there is no
indication of an early rate hike."
He added it was "not a bold forecast" to expect the euro to
hit $1.50 in the next week or two.
Euro technical resistance is seen at the Dec. 7, 2009 peak
of $1.4905. Above $1.4900, traders reported more offers at
$1.4930 up to $1.4950, where another options barrier was
reported.
Against the yen, the dollar was down 0.7 percent at 81.65
yen <JPY=>. The euro fell 0.6 percent at 120.71 yen <EURJPY=>.
The Bank of Japan late Wednesday lowered its growth
outlook.
Jens Nordvig and Ikeda Yunosuke, foreign exchange
strategists at Nomura Securities, said likely BoJ easing will
come when other global central banks are either in tightening
mode, such as the European Central Bank and the Bank of
England, or starting to contemplate the exit, like the Fed.
"We have been in no rush to recommend USD/JPY longs lately,
but as we drift closer to 80, the upside trade is looking
increasingly attractive," they said. "At the same time, we are
looking for direction from Toshin flows (slightly more positive
lately) and U.S. rates (negative in April so far), in order to
time any fresh short yen trades."
With U.S. interest rates expected to remain at record lows
for the foreseeable future, higher-yielding currencies are
expected to continue to outperform the dollar.
The high-yielding Australian dollar <AUD=> scaled a fresh
post-float high of $1.0948, the free float began in December
1983, but was last little changed at $1.0868. Sterling hit a
17-month peak <GBP=> but was last little changed at $1.6629.
(U.S. Treasury Team; Editing by James Dalgleish)
