* Dollar index punches to 6-month high, up for 8th day
* Euro, Aussie fall further along with commodities
* On charts, dollar seen staging major rebound
By Rika Otsuka
TOKYO, Aug 12 (Reuters) - The dollar hit a six-month high
against a basket of major currencies on Tuesday as mounting
concern that the global economy is headed for a sharper slowdown
spurred more selling of the euro and higher-yielding currencies.
The euro slumped to a six-month low against the dollar,
while the pound slid to a 21-month trough as investors kept
bailing out of bets that the global economy could withstand the
housing-driven downturn in the United States.
Market players such as macro funds are cutting losses by
covering short positions in the dollar, unwinding bets favouring
the euro, Australian dollar and commodities. The slide in oil
and gold prices has only reinforced the dollar's sharp rebound.
European Central Bank President Jean-Claude Trichet
surprised investors last week by saying the euro zone economy
was slowing more than policymakers had expected.
The euro, which last Friday suffered its biggest one-day
drop since January 2001, has broken a slew of key chart levels,
convincing some analysts the dollar may be in the process of
snapping its seven-year slide.
"The deteriorating economic outlook for the euro zone and
elsewhere is now having an impact after the market had become
used to weakness in the U.S. economy," said Kosuke Hanao, head
of forex sales at HSBC in Tokyo.
"Technical factors may drive the dollar a little higher, but
how long it will stay strong remains to be seen especially when
the U.S. economy is not in good shape either," Hanao said.
The high-yielding Australian dollar sank to a seven-month
low against the dollar, a day after the Reserve Bank of
Australia said the economy looked to be slowing enough to
significantly reduce inflation over time, providing more scope
to cut interest rates.
Adding to the case for an urgent cut in Australian rates, a
key measure of business conditions struck its lowest level in
seven years in July as firms reported falling sales and
profitability. []
Like the euro, the Australian dollar was hit by worries over
sharp falls in commodities because Australia is a big exporter
of precious metals and other resources.
"The Aussie is hurt by a double-whammy of falling commodity
prices and expectations for RBA rate cuts," said Hiroshi
Yoshida, a forex trader at Shinkin Central Bank.
The euro dipped 0.1 percent from late U.S. trade to $1.4883
<EUR=> after touching a six-month low of $1.4860 on trading
platform EBS earlier in the day and well off the record peak of
$1.6040 struck last month.
Traders said the euro would have a tough time rising back to
the $1.50-1.53 zone that had been its base of support for the
last several months.
The European single currency was flat at 163.97 <EURJPY=R>
after slipping to a two-month low of 163.75 on EBS.
The dollar index <.DXY>, which measures the U.S. unit
against a basket of six currencies, was up 0.1 percent at 76.337
after climbing to a six-month high of 76.428.
The index rose for the eighth straight trading day and over
that time has surged 4.3 percent -- on track for its biggest
such winning streak in 13 years.
The dollar edged up 0.1 percent to 110.15 yen <JPY=>,
staying within striking distance of a seven-month peak of 110.40
hit on EBS the previous day.
Oil gave up earlier gains, slipping 0.6 percent to $113.83 a
barrel <CLc1> a day after hitting a three-month low of $112.72.
It is down more than 20 percent from its recent record high.
[]
Gold extended losses and tumbled to its weakest in almost
eight months. []
The Australian dollar dropped 0.7 percent on the day to
$0.8771 <AUD=D4> after falling as low as $0.8755, the weakest
since January.
(Additional reporting by Satomi Noguchi; Editing by Chris
Gallagher)
