* AUD, NZD dlrs fall as dollar rises broadly
* NZD falls after unexpected drop in retail sales
* Yen hits 7-mth high vs USD with cross/yen falls
By Rika Otsuka
TOKYO, Sept 14 (Reuters) - The dollar rose broadly on Monday
with the Australian and New Zealand dollars down sharply as
speculators covered short positions that had pushed the greenback
to one-year lows.
The higher-yielding Australian dollar lost about 1 percent
against the dollar as oil prices <CLc1> dropped, denting
commodities-linked currencies, traders said.
The dollar's rebound had started with the New Zealand
dollar's fall in early trade after soft data showing the
country's retail sales dipped unexpectedly in July, traders said.
The yen, however, hit a seven-month high against the dollar
in early Asian trade, helped by slides in other major currencies
versus the dollar.
Many analysts said Monday's dollar rebound was only a
temporary blip in its downward trend, with the greenback recently
undermined by falling Treasury yields and the view that it is
replacing the yen as the funding currency for carry trades.
Persistent talk of Asian central banks diversifying from U.S.
dollars to other currencies and assets, including gold, had also
contributed to dollar selling last week.
"A rise in the dollar is nothing more than a technical
rebound and the greenback's downtrend is unchanged," said Hideki
Hayashi, global economist at Mizuho Securities.
"Given their yield advantages, the Australian and New Zealand
dollars will continued to be preferred over the U.S. dollar."
The Australian dollar fell 0.8 percent to $0.8571 <AUD=D4>,
retreating from Friday's high of $0.8677, a high of more than one
year.
The New Zealand dollar slid 1.4 percent to $0.6981 <NZD=D4>,
off Friday's peak of $0.7089, also a high of more than one year.
New Zealand retail sales for July fell unexpectedly for the
second month in a row, backing the central bank's view that
recovery from recession was patchy. []
The dollar index, a gauge for the greenback's performance
against six major currencies, rose 0.4 percent to 76.876 <.DXY>,
rebounding from its one-year low of 76.457 hit late last week.
DUE FOR REBOUND
The dollar was seen ready for a broad rebound on
short-covering after currency speculators built up huge bets
against the greenback to their highest levels since at least
mid-July 2008 when the euro hit its record high against the U.S.
currency. []
The euro slipped 0.2 percent to $1.4541 <EUR=>. Traders said
hedge funds sold the European currency earlier in the day to book
profits on its rally to a 2009 peak of $1.4636 struck on trading
platform EBS on Friday.
The euro fell 0.5 percent to 131.50 yen <EURJPY=R> partly as
a 2.4 percent drop in Tokyo's Nikkei share average <>
prompted Japanese investors to trim long positions in
higher-yielding currencies previously built on hopes for global
recovery.
The dollar was down 0.2 percent at 90.52 yen <JPY=>, having
fallen earlier to 90.18 yen on EBS, its lowest since February.
"Many large option barriers await the dollar/yen around 90
yen, which is likely to make the yen's rise slow-paced," said a
forex trader at a Japanese trust bank.
"At the same time, many believe it is only a matter of time
before the dollar falls below the 90 yen level as there is little
sense of the market being overheated."
A break below 90 yen level will likely pose a headache for
Japanese authorities who have usually frowned on a sharply higher
currency in the past.
But analysts are not sure how Japan's incoming government
will tackle the problem, although they say the Democrats appear
to favour a more hands-off attitude then Japan has had in the
past. []
(Additional reporting by Anirban Nag and Satomi Noguchi; Editing
by Edwina Gibbs)
