* Euro hits two-week high after Trichet's FX comments
* Aussie gains on jobs data, more rate hikes expected
* Dollar index down 0.7 pct as risk appetite improves
* Several central banks bought dollars to slow its decline
(Adds comment, updates prices, changes byline)
By Leah Schnurr
NEW YORK, Oct 8 (Reuters) - The U.S. dollar fell to a 14-month low against
a basket of currencies on Thursday as growing optimism of a burgeoning economic
recovery prompted demand for riskier assets at the expense of the safe-haven
greenback.
The euro also strengthened after European Central Bank President
Jean-Claude Trichet stuck to his standard message that U.S. support for a
strong dollar was important, disappointing traders that had expected a more
forceful statement.
Trichet's comments came after the ECB held interest rates steady at a
record low of 1.0 percent. He also said the euro zone economy is stabilizing,
but cautioned against hopes of a speedy recovery, saying that current interest
rates were suitable for the economic situation. For details, see
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"Obviously euro strength is concerning for them, so Trichet
reiterated that a strong dollar policy is important, but that wasn't too much
of a surprise," said Brian Kim, currency strategist with UBS in Stamford,
Connecticut.
Kim added Trichet's comments were similar to what he said ahead of a
meeting of the Group of Seven wealthy nations at the end of September.
The euro was up 0.7 percent at $1.4787 <EUR=>, after hitting a session high
of $1.4817, according to Reuters data, the highest level in two weeks.
The ICE Futures U.S. dollar index, a measure of the greenback against six
major currencies, fell as low as 75.767, the lowest level since August, 2008.
It was last down 0.7 percent at 75.929 <.DXY>.
Traders said for the index, 74.30 is a breakout level that could spark
further weakness in the dollar. A breach of that level would target 71.30,
followed by the index's all-time low around 70.70, set in March 2008.
Analysts said several central banks, including those from smaller emerging
economies in Asia, have bought dollars to slow the currency's slide.
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"It was reported that earlier this morning that Russia was one of at least
six central banks buying dollars," said Michael Woolfolk, senior currency
strategist at BNY Mellon in New York.
RECOVERY PLAY
Nonetheless, traders resumed selling the dollar in favor of better
performing assets as U.S. stock markets climbed on upbeat jobs data and a
surprise profit from Alcoa Inc <AA.N>.
"It's just a continuous recovery play," said Fabian Eliasson, vice
president of currency sales at Mizuho Corporate Bank in New York. "We're seeing
good numbers all over the place."
The dollar was down 0.2 percent at 88.41 yen <JPY=>. Wednesday's
eight-month low of 88.01 yen was the most immediate target and a break below
that would bring January's 13-year low of 87.10 yen into view as traders test
how far and fast Japan's Ministry of Finance will let the yen strengthen.
The Australian dollar jumped 1.7 percent to US$0.9063 <AUD=>. Data showed
Australian employment for September rose above expectations and pushed the
Aussie to a fresh 14-month high against the U.S. currency as markets
anticipated more interest rate hikes this year. []
Earlier this week Australia became the first Group of 20 economy to raise
rates coming out of the financial crisis.
(Additional reporting by Wanfeng Zhou, Nick Olivari and Gertrude
Chavez-Dreyfuss)
(Editing by Theodore d'Afflisio)
