* Dollar off lows on bargain hunting but still under pressure
* Pound falls after Fitch warns on UK rating
* Euro, cross/yen trim gains on profit-taking but stay firm
* Leveraged carry trades and commodities boost Aussie
By Kaori Kaneko
TOKYO, Nov 10 (Reuters) - The dollar hovered just above a
15-month low against a basket of currencies on Tuesday as
investors looked to return to leveraged carry trades, while
sterling tumbled after a warning on Britain's credit rating.
Fitch Ratings said that of the four major economies with AAA
status, the UK was the most at risk, sending the pound down
sharply to shed as much as 1 percent on the day against the
dollar before it recovered half a cent from the lows.
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David Riley, co-head of global sovereign ratings at Fitch,
said if there was another significant fiscal stimulus package in
Britain its rating would be at risk.
The pound slipped as far as $1.6600 <GBP=D4> from above
$1.6750 before edging back to $1.6650 and fell more than 0.5
percent on the day to beyond 90.00 pence per euro <EURGBP=D4>,
before paring lossees to 89.93 pence.
"It reminded the market about the UK's fiscal issues and
prompted investors to take profits in a recent sharp rise in the
pound, which had risen towards the year's high," said Ayako Sera,
a market strategist at Sumitomo Trust & Banking.
An index of the dollar's performance against six major
currencies edged up 0.1 percent to 75.130 <.DXY>, having dropped
about 1 percent the previous day to as low as 74.93, its weakest
since August 2008. It was the biggest one-day fall since late
July.
Expectations that U.S. interest rates are likely to stay
near zero for a while are encouraging investors to use the dollar
to fund carry trades in higher-yielding assets.
"With relatively solid stocks and higher commodity prices,
and major events out of the way, market sentiment has shown a
sense of relief," said Mitsuru Sahara, chief manager of currency
derivatives trading at Bank of Tokyo-Mitsubishi UFJ.
"The dollar is weakening broadly at a gradual pace but market
volatility is low and there is no climate of returning to
crisis," he said.
But other currencies retained much of their gains against the
dollar made on Monday when the aftermath of a G20 meeting
reinforced expectations for U.S. rates to stay low for a while.
The euro edged down 0.1 percent to $1.4980 <EUR=>, after
gaining about 1 percent on Monday and rising above $1.50 for the
first time since late October, nearing its 2009 high of $1.5064.
Traders said a number of option strikes were lurking around
the $1.5025 level.
Some profit-taking emerged on the euro and other yen crosses
before a U.S. market holiday on Wednesday, with sterling also
dropping against the Japanese currency.
The dollar eased 0.1 percent to 89.85 yen <JPY=>, with talk
of profit-taking likely above 90.00 yen and options located above
that level, dealers said.
The euro slid 0.3 percent to 134.59 yen <EURJPY=R>, having
gained more than 1 percent on Monday.
A host of officials from the Federal Reserve are expected to
speak in the coming hours and the market will watch what they say
regarding the outlook for interest rates and the eventual
withdrawal of easy monetary policy measures. The speakers include
Dennis Lockhart, Janet Yellen, Eric Rosengren and Richard Fisher.
The Australian dollar <AUD=D4> rose as high as $0.9324,
nearing a 15-month high at $0.9330, helped by higher commodities
<.CRB> and a jump in gold prices <XAU=>. Australia is a big
exporter of industrial raw materials. It later slipped to $0.9276
after gaining 1 percent on Monday.
The New Zealand dollar <NZD=D4>, which jumped more than 2
percent on Monday, inched back to $0.7393.
(Additional reporting by Anirban Nag in Sydney; Editing by
Michael Watson)
