* Dollar hits 8-month low of 86.15 yen on EBS
* Traders look to U.S. Q2 GDP growth to slow
* Euro/yen hit on bond redemption flows
(Adds quote, updates prices)
By Tamawa Desai
LONDON, July 30 (Reuters) - The dollar hit multi-month lows
against the yen and Swiss franc on Friday on concerns U.S.
economic growth data would reinforce signs the world's largest
economy is slowing and on a Fed policymaker's dovish comments.
Dollar bears were looking to U.S. second-quarter GDP due at
1230 GMT as a further opportunity to sell the currency, with
growth forecast to slow to an annual 2.5 percent in the three
months to June from 2.7 percent in the first quarter. []
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They also seized on a comment by the normally hawkish St.
Louis Federal Reserve Bank President James Bullard, a voting
member on the Fed's rate-setting committee this year, who said
the Fed should buy more Treasuries if the economy worsened.
[]
By 1002 GMT, the dollar was down 0.5 percent at 86.31 yen
<JPY=>, after hitting an eight-month low of 86.15 yen on trading
platform EBS. Stop-loss sales were triggered at a previous low
of 86.25 yen, traders said, adding bids were layered into option
barriers at 86.00.
"We're in a small window where U.S. economic data is
underperforming and keeping pressure on the dollar," said Lee
Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
"Concerns about the U.S. economy and Fed easing will also
put U.S. yields on the downside, which is a key driver for
dollar/yen," he said.
The yen took in its stride comments by Japanese Finance
Minister Yoshihiko Noda who said he was closely watching the
market. Deputy Finance Minister Motohisa Ikeda said he was
worried about the impact of a rising yen on Japan's exports.
[] []
Market players have said they do not seriously expect
Japanese authorities to intervene to stem the yen's rise until
it goes beyond 15-year highs of 84.82 yen to the dollar.
The dollar also fell to a six-month low against the Swiss
franc of 1.0364 francs <CHF=>. That also prompted the Swiss
currency to rise against the euro <EURCHF=>.
The dollar index <.DXY> was up slightly at 81.826 after
touching a three-month low of 81.483.
Traders anticipated month-end selling of dollars to emerge
for the 1500 GMT fix, stemming from rebalancing flows after a
strong performance in world stocks in July, as measured by MSCI
<.MIWD00000PUS>.
EURO DIPS
The euro fell 1 percent versus the yen <EURJPY=R> to 112.40
yen and 0.5 percent versus the dollar to $1.3011 <EUR=>. Traders
said the euro's fall against the yen was related to redemption
flows from Spanish bonds [].
The euro's recovery to an 11-week high versus the dollar
earlier in the week had been partly driven by rising euro zone
money market rates, which fell on Friday [].
"We've seen Euribor 3-month rates drop for the first time in
a long time today and which is adding pressure on the euro,"
said Hans-Guenter Redeker, chief fx strategist at BNP Paribas.
Technical analysts at Commerzbank said euro/dollar had
practically reached an interim target of $1.3120/50 and this
would allow for some profit-taking.
(Additional reporting by Neal Armstrong)
