* Dollar index struggles near 16-month low
* Euro hovers near 15-month high vs dollar
* Talk of model funds selling euro/yen
* Euro option barrier at $1.4525, stops above-trader
* Euro zone debt concerns may temper euro gains
(Updates currency levels, adds details on Chinese data)
By Masayuki Kitano
SINGAPORE, April 15 (Reuters) - The euro dipped but stayed
within sight of a 15-month peak against the dollar on Friday,
with further losses expected to be limited given the diverging
outlook for monetary policy in the euro zone and the United
States.
Not helping the dollar, several top Federal Reserve
officials have sounded relaxed about inflation despite the
recent surge in oil prices, adding to expectations the Fed will
not cut short its $600 billion debt-buying programme.
[]
The euro, in contrast, remains supported by the prospect of
higher interest rates in the euro zone despite comments by
Germany that Greece may need to restructure its debt
[].
"When you are talking about the relative yield play, it
probably does favour the euro," said Andrew Robinson, FX analyst
for Saxo Capital Markets in Singapore.
"I don't think there is much in the way to prevent further
dollar slippage," Robinson said, adding that a meeting of Group
of 20 finance officials on Friday seemed unlikely to cause a
shift in that trend.
The euro eased 0.1 percent from late U.S. trade on Thursday
to $1.4472 , still not very far from a 15-month high of
$1.4521 hit earlier this week.
An option barrier in the euro lies at $1.4525 and there are
stops above that level, going up to $1.4550, said a trader for a
European bank in Singapore.
The existence of such an option barrier suggests the euro
could face selling from options players if it rises close to the
barrier level, but also means the euro could find it easier to
rise if the barrier is taken out or it expires.
Market players said the euro could find the going tough
above $1.45 given the sovereign debt problems, which took
a turn for the worse after Germany suggested for the first time
that Athens may have to restructure its large debt load.
Greek borrowing costs soared to new highs on Thursday and
added pressure on other financially weak euro zone
members.[]
The euro fell 0.2 percent against the yen to 120.76 yen
, but remained well above a low of 119.26 yen hit the
previous day. The trader for a European bank in Singapore cited
selling of the euro against the yen by model funds.
The single currency has given up some ground against the yen
since hitting an 11-month peak of 123.33 yen on trading platform
EBS earlier this week.
There was little impact on currencies from a batch of
Chinese data released on Friday, with most of the numbers
already having been reported by Hong Kong media the day before.
Friday's data also showed China's economic growth eased just
a touch to 9.7 percent in the first quarter from a year earlier,
down from 9.8 percent in the last quarter of 2010 but ahead of
an expected 9.5 percent increase. []
The dollar edged up 0.1 percent against a basket of major
currencies to 74.770 , near a 16-month trough of 74.617
struck on Thursday.
"The long-term story of recycling reserves out of dollars
remains ever more pronounced following China's record reserve
accumulation in Q1 of over $3 trillion," analysts at BNP Paribas
wrote in a client note.
Indeed, following Singapore central bank's decision on
Thursday to allow its currency to strengthen to tackle
inflation, the long-Asian-currencies story remains intact, they
said.
"The flows into Asia will therefore continue - and the
recycling of intervention USD will too, especially since we do
not expect much FX appreciation pressure on Asian monetary
authorities at the G20/IMF meetings this weekend," said BNP.
U.S. economic data on Thursday also failed to excite dollar
bulls and a surprise jump in U.S. jobless claims raised
questions about the health of the labour market recovery.
[]
The dollar held steady at 83.46 yen .
Like the dollar, the Japanese currency has been used as a
funding currency because of the Bank of Japan's ultra-loose
monetary policy. The BOJ may ease further to support a recovery
after last month's devastating earthquake and tsunami.
Another focal point for the yen is whether Japanese
institutional investors will step up investment in overseas
assets in Japan's new fiscal year that started this month.
Japan's Fukoku Mutual Life Insurance said earlier this week
it plans to increase its foreign bond holdings by about $826
million while reducing its currency hedging for overseas debt on
a bet the yen will weaken during the financial year to March
2012. []
(Additional reporting by Ian Chua in Sydney; Editing by Kim
Coghill)
