FOREX-Dollar gets a reprieve after Bernanke remarks

                                
 * Dollar gets support from Bernanke after relentless fall
                                
 * Dollar/yen up 1 pct before long weekend in Japan
                                
 * Aussie off 14-month highs but rate outlook helps
                                
 By Satomi Noguchi
                                
 TOKYO, Oct 9 (Reuters) - The dollar rose on Friday after
Federal Reserve Chairman Ben Bernanke indicated monetary policy
may have to be tightened as a recovery takes hold, lifting the
greenback off 14-month lows against a basket of currencies.
                                
 Traders said Bernanke's remarks, although not new, prompted
speculators to cover short dollar positions and lifted the U.S.
currency against the yen by more than 1 percent at one point as
more market players lightened positions ahead of Japan's long
weekend.
                                
 The dollar has succumbed to selling pressure in recent weeks,
hurt by the market view that U.S. interest rates are likely to
remain low for some time.
                                
 But Bernanke said late on Thursday that the Fed has the tools
and the ability to pull back its flood of cash and loans to the
economy -- one of the main reasons behind the dollar's broad
weakness -- while he reiterated that accommodative policies are
likely to be needed for an extended period. [ID:nN08545619].
                                
 "Bernanke's comments suggest he does not like the dollar
sliding against the euro," said Hideki Amikura, deputy general
manager of the forex section at Nomura Trust Bank in Tokyo.
                                
 Some traders took Bernanke's comments as a response to
European Central Bank president Jean-Claude Trichet, who said
U.S. support for a strong dollar was important and that excessive
foreign exchange moves were unwelcome, though Trichet has said
the same thing before. [ID:nL8111212]
                                
 The euro <EUR=> fell 0.4 percent to $1.4728, nearly erasing
gains made after Trichet's comments fell short of some market
players' expectations that he would make a more forceful
statement after the ECB's policy meeting to address the single
currency's recent gains.
                                
 The euro had climbed as high as $1.4818 on trading platform
EBS the previous day, near a one-year high of $1.4845 hit in late
September.
                                
 The dollar index, a gauge of the greenback's performance
against six other major currencies, rose 0.4 percent to 76.266
<.DXY> after having slid as low as 75.767 on Thursday, its lowest
since August 2008.
                                
 The dollar rose as high as 89.32 yen on EBS from an earlier
low of 88.36 yen, before trading at 89.23 yen, up 0.9 percent.
                                
 "Those who had expanded dollar shorts up until yesterday were
forced to close out their positions after Bernanke," said a
trader for a Japanese trust bank.
                                
 "This corrective move in the dollar's slide could be deeper
if other assets like gold were to move correctively as well after
rallies," the trader said.
                                
 Gold fell below $1,050 per ounce on Friday, snapping a rally
that took prices to record highs above $1,060 for three
consecutive days. [GOL/]
                                
 DOLLAR BEARS TO REIGN
                                
 More comments defending the dollar came from top U.S.
presidential adviser Lawrence Summers, who said Treasury
Secretary Timothy Geither has made clear that the United States
is committed to a strong dollar. [ID:nN08546426]
                                
 But Nomura Trust's Amikura said the market was still mostly
bearish about the greenback as the Fed was expected to find it
difficult to exit its current loose monetary policy due to the
high U.S. unemployment rate.
                                
 That was despite U.S. data showing the number of workers
filing for new jobless claims hitting a 9-month low.
[ID:nN08520274]
                                
 Bearish sentiment for the dollar has led market players to
favour higher-yielding currencies amid an improved appetite for
riskier assets such as stocks and commodities.
                                
 Asian stock markets tracked Wall Street higher on a
surprisingly strong start to the U.S. Q3 earnings season after
Alcoa <AA.N> posted a quarterly profit.
                                
 "Wall Street remains the key barometer for investor appetite
for risk forex and thus is still the key danger to our underlying
bullish stance on Aussie and New Zealand dollar," Westpac said in
a research report.
                                
 The Australian dollar <AUD=D4> slipped from 14-month highs of
$0.9092 touched the day before, but held above 90 U.S. cents
buoyed by expectations of further rate hikes after strong local
jobs data for September. [ID:nSYD431125].
 (Additional reporting by Anirban Nag in Sydney; Editing by
Michael Watson)