* Dollar recovers from 15-mth low as market digests Bernanke
* China's Hu makes no mention of yuan after Obama meeting
* Dlr supported by waning risk appetite; commodity FX fall
(Updates prices, adds quotes)
By Jamie McGeever and Jessica Mortimer
LONDON, Nov 17 (Reuters) - The dollar rebounded on Tuesday
from Monday's 15-month lows after Federal Reserve Chairman Ben
Bernanke made rare comments about the dollar, encouraging
traders to trim longer-term bets against the currency.
Bernanke surprised investors on Monday when he said the
central bank was "attentive to implications of changes in the
value of the dollar", although he reiterated that interest rates
would remain exceptionally low for an "extended period".
Some interpreted his remarks on the dollar, which is usually
the purview of Treasury, as a sign the Fed is worried further
depreciation could stoke inflation. []
"He was trying to emphasise to the market what Fed thinking
is going into the last few months of the asset purchase scheme,"
said Societe Generale senior currency strategist Peter Frank.
He said the dollar remained in a longer-term downtrend and
that Bernanke's remarks were probably aimed more at "smoothing"
its decline than reversing it. He added that traders were "a
little uncomfortable" being long of euros above $1.50.
The dollar also benefited as investors trimmed exposure to
risk, with equity, oil and gold prices all lower, gaining
particularly against commodity-linked currencies such as the
Australian <AUD=D4> and Canadian dollars <CAD=D4>.
"People are paring back on risk after we had a 'risk-on' day
yesterday," said UBS currency strategist Geoffrey Yu.
He added that Bernanke's comments, and those of some other
policymakers, were probably not enough to give the dollar a
lasting lift without "having China on board" too.
European Central Bank President Jean-Claude Trichet also
spoke on currencies on Tuesday, reiterating his view that a
strong dollar is in the U.S. interest and that the euro was
never intended to be a reserve currency. [].
At 1238 GMT the dollar index <.DXY> was up 0.6 percent on
the day at 75.399, after striking a 15-month low of 74.679 on
Monday.
The euro <EUR=> fell 0.7 percent to $1.4866. The single
currency hit a high of $1.5015 on Monday but has struggled to
hold above $1.50. Traders said it was weighed down early on by
profit booking and options-related selling around that level.
It was in the middle of the $1.48-$1.51 range which they
said marked a large "double-no-touch" options structure that
rolls off on Friday.
The dollar was up 0.2 percent against the yen at 89.33 yen
<JPY=>, recovering from 88.74 yen earlier in the day, its lowest
in just over a month.
U.S. data may get attention later, with producer prices,
industrial production and pending home sales due. <ECONUS>
FED RHETORIC
Bernanke's comments on Monday came as U.S. President Barack
Obama was in China, although few expect the visit to result in
any near-term changes in Beijing's foreign exchange policy.
Chinese President Hu Jintao did not mention the yuan after
meeting Obama, who only said he was pleased with China's
commitment to move toward a more market-oriented exchange rate.
[]
For the dollar to reverse its long-term downtrend, analysts
say China needs to take steps towards a more flexible currency
regime, or the Fed has to signal imminent rate hikes.
"Neither of those prerequisites have been fulfilled, so the
controlled, grinding lower of the dollar will continue," Javeus
said Johan Javeus, strategist at SEB in Stockholm.
Sterling gained versus the euro after data showed UK
inflation jumped [], and on a press report that
Italian chocolatier Ferrero might be considering an offer for an
alliance with Britain's Cadbury <CBRY.L>. []
The euro was down 0.4 percent at 88.61 pence <EURGBP=>,
having hit a two-month low of 88.49 pence.
