(Fixes link to graphic on personal consumption)
* US dollar index at 3-year low, worst month since Sept
* Swiss franc at record high vs USD, helped by SNB comments
* Month-end flows seen tilted toward dollar selling
(Updates prices, adds details and quote)
By Julie Haviv
NEW YORK, April 29 (Reuters) - The U.S. dollar hit a
three-year low against a basket of currencies on Friday, ending
the month with its biggest loss since September, with more
weakness expected as the Federal Reserve keeps interest rates
low while the European Central bank raises them.
Higher interest rates in Europe have undermined support for
the dollar, boosting the euro by 11 percent so far this year.
The U.S. dollar index <.DXY> hit a three-year low of
72.834. The index has fallen for five straight months after
tallying a 3.8 percent April decline.
"There is no fundamental reason for investors to buy
dollars aside from the possibility that it is now undervalued,"
said Kathy Lien, director of currency research at GFT Forex in
New York.
The dollar index last traded at 72.996, down 0.2 percent.
In contrast, the euro/dollar gained 4.7 percent in April,
marking its strongest month since September.
The euro was buoyed by stronger-than-expected euro zone
inflation data that increased the chance of another ECB rate
rise, sooner rather than later. For more, see []
The euro last traded at $1.4834 <EUR=>, up 0.1 percent,
after hitting a high of $1.4878. The euro on Thursday hit a
17-month peak of $1.4882 on trading platform EBS.
But the euro ran into selling and could struggle ahead of
a reported options barrier at $1.4900.
Resistance was expected at $1.4906, a peak from Dec. 7
2009, ahead of a substantial barrier at $1.5000. Beyond
$1.5000, the key target was the 2009 high of $1.5145.
Technical factors and overextended speculative positioning
suggest the dollar's decline may slow next week, according to
Vassili Serebriakov, currency strategist at Wells Fargo in New
York,
"However, with the Fed sending a strong dovish message, we
see few significant triggers for an immediate dollar
turnaround."
U.S. economic data on Friday showed consumer spending rose
as households stretched to cover the higher cost of food and
gasoline as inflation posted its biggest year-on-year rise in
10 months. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For graphic on U.S. personal consumption
http://r.reuters.com/kak39r
Fed funds rate hike expectations
http://r.reuters.com/xyz48r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Nevertheless, based upon price action in the market, there
are some signs the dollar may be reaching a bottom, Lien said.
"From a purchasing power parity perspective, the dollar is
undervalued against every major currency, with the trade
weighted index now approaching its lowest level since before
the Plaza Accord in the 1980s," she said.
"The recent extremeness of the dollar's move could attract
value hunters, but with a number of key event risks next week
posing a threat to the U.S. dollar, we don't expect a material
recovery."
The U.S. Labor Department will publish monthly
unemployment next week.
Analysts at Citigroup said dollar bearishness should
persist.
"It is hard to be optimistic on the USD's long-term
prospects, given the Fed's ability to surprise on the dovish
side, the ongoing overhang of U.S. dollar assets among reserve
managers and the concerns that have emerged on long-term U.S.
fiscal prospects," CitiFX said in a research note.
Trading was thinned by the holiday for Britain's royal
wedding.
The Swiss franc was buoyed by upbeat comments from the
Swiss National Bank's chairman and an above-forecast Swiss
sentiment survey. []
The Swiss franc rose around 0.8 percent on the day to hit a
record high of 0.8653 francs per dollar <CHF=> on EBS. The euro
was last down 0.7 percent <EURCHF=> at 1.2858 francs.
Against the yen, the dollar was down 0.4 percent at 81.18
yen <JPY=>.
(Additional reporting by Jessica Mortimer in London; Editing
by Kenneth Barry)
